GE HealthCare reports second quarter 2024 financial results

Revenues were flat year-over-year; Organic revenue growth* was 1%
Net income margin was 8.9% versus 8.7% for the prior year; Adjusted earnings before interest and taxes (EBIT) margin* was 15.3% versus 14.8%
Diluted earnings per share (EPS) were $0.93 versus $0.91 for the prior year; Adjusted EPS* was $1.00 versus $0.92
Cash flow from operating activities was $(119) million versus $(67) million for the prior year; Free cash flow* was $(182) million versus $(136) million
Company updates full-year guidance for Organic revenue growth* and Adjusted EBIT margin*

CHICAGO–(BUSINESS WIRE)–GE HealthCare (Nasdaq: GEHC) today reported financial results for the second quarter ended June 30, 2024.

GE HealthCare President and CEO Peter Arduini said, “In the second quarter, we delivered year-over-year sales growth and margin expansion despite headwinds in the China market. We also reported solid orders growth with particular strength in the U.S., as healthcare systems invest in technologies that enhance patient care and improve productivity. We are pleased with our continued progress in advancing our margin goals, while continuing our investments for future growth.”

Second quarter 2024 total company financial performance

Revenues of $4.8 billion were flat as reported and up 1% on an Organic* basis year-over-year, with positive price and volume
Total company book-to-bill, defined as Total orders divided by Total revenues, was solid at 1.06 times. Total company orders increased 3% organically year-over-year.
Net income attributable to GE HealthCare was $428 million versus $418 million for the prior year, and Adjusted EBIT* was $742 million versus $711 million
Net income margin was 8.9% versus 8.7% for the prior year, up 20 basis points (bps). Adjusted EBIT margin* was 15.3% versus 14.8%, up 60 bps as both measures saw benefits from productivity and price.
Diluted EPS was $0.93 versus $0.91, up $0.02 from the prior year. Adjusted EPS* was $1.00 versus $0.92, up $0.09 from the prior year as both measures saw improved EBIT and lower interest expense.
Cash flow from operating activities was $(119) million, down $52 million year-over-year. Free cash flow* was $(182) million, down $46 million year-over-year.

Second quarter 2024 segment financial performance (Unaudited)

Segment *($ in millions)*	Imaging	Ultrasound	Patient Care Solutions	Pharmaceutical Diagnostics
Segment Revenues	$2,596	$823	$772	$639
YoY % change	(1)%	(2)%	—%	12%
YoY % Organic* change	—%	(1)%	1%	14%
Segment EBIT	$286	$178	$78	$200
YoY % change	3%	(7)%	(8)%	31%
Segment EBIT Margin	11.0%	21.6%	10.1%	31.2%
YoY change	40 bps	(120) bps	(90) bps	450 bps
YoY refers to year-over-year comparison

Growth and innovation

Mr. Arduini continued, “The recent Centers for Medicare & Medicaid Services reimbursement proposal has the potential to benefit patients in the U.S. facing cancer, cardiovascular, and neurological diseases. We believe this will unlock the value of our radiopharmaceuticals and PET and SPECT scanners, ultimately enabling more precise diagnostic and treatment planning for patients. We’re optimistic about our pipeline of innovation and ability to bring differentiated solutions to market.”

Recent innovation and commercial highlights

2024 guidance

Today, the Company updates full-year 2024 guidance for Organic revenue growth* and Adjusted EBIT margin* and reaffirms other metrics as follows:

Organic revenue growth* in the range of 1% to 2% year-over-year versus the prior guide of approximately 4%, due to China market headwinds
Adjusted EBIT margin* in the range of 15.7% to 16.0%, reflecting an expansion of 60 to 90 basis points versus 2023 Adjusted EBIT margin* of 15.1%; this compares to prior guidance of 15.6% to 15.9%
Adjusted effective tax rate (ETR)* in the range of 23% to 25%
Adjusted EPS* in the range of $4.20 to $4.35, representing 7% to 11% growth versus Adjusted EPS* of $3.93 for 2023
Free cash flow* of approximately $1.8 billion

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

Financial rounding

Certain columns and rows in this document may not sum due to the use of rounded numbers. Percentages presented are calculated from the underlying whole-dollar amounts.

Condensed Consolidated Statements of Income (Unaudited)
	For the three months ended June 30						For the six months ended June 30
*(In millions, except per share amounts)*		2024			2023			2024			2023
Sales of products	$	3,207		$	3,213		$	6,253		$	6,344
Sales of services		1,632			1,604			3,237			3,180
Total revenues		4,839			4,817			9,489			9,524
Cost of products		2,045			2,084			4,012			4,121
Cost of services		792			793			1,574			1,572
Gross profit		2,002			1,940			3,904			3,831
Selling, general, and administrative		1,067			1,072			2,105			2,134
Research and development		327			298			651			568
Total operating expenses		1,395			1,370			2,756			2,702
Operating income		608			570			1,148			1,129
Interest and other financial charges – net		131			137			254			273
Non-operating benefit (income) costs		(101	)		(123	)		(204	)		(238	)
Other (income) expense – net		(1	)		(14	)		8			(22	)
Income before income taxes		578			570			1,090			1,116
Benefit (provision) for income taxes		(143	)		(137	)		(267	)		(300	)
Net income		435			433			823			816
Net (income) loss attributable to noncontrolling interests		(7	)		(15	)		(21	)		(26	)
Net income attributable to GE HealthCare		428			418			802			790
Deemed preferred stock dividend of redeemable noncontrolling interest		—			—			—			(183	)
Net income attributable to GE HealthCare common stockholders	$	428		$	418		$	802		$	607

Earnings per share attributable to GE HealthCare common stockholders:
Basic	$	0.94		$	0.92		$	1.76		$	1.34
Diluted	$	0.93		$	0.91		$	1.75		$	1.33
Weighted-average number of shares outstanding:
Basic		457			455			456			455
Diluted		459			458			459			458

Condensed Consolidated Statements of Financial Position (Unaudited)
	As of
*(In millions, except share and per share amounts)*	June 30, 2024			December 31, 2023
Cash, cash equivalents, and restricted cash	$	2,015		$	2,504
Receivables – net of allowances of $103 and $98		3,343			3,525
Due from related parties		11			32
Inventories		2,023			1,960
Contract and other deferred assets		977			1,000
All other current assets		437			389
Current assets		8,806			9,410
Property, plant, and equipment – net		2,458			2,500
Goodwill		13,116			12,936
Other intangible assets – net		1,195			1,253
Deferred income taxes		4,365			4,474
All other non-current assets		1,913			1,881
Total assets	$	31,852		$	32,454
Short-term borrowings	$	1,007		$	1,006
Accounts payable		2,824			2,947
Due to related parties		27			99
Contract liabilities		1,876			1,918
Current compensation and benefits		1,235			1,518
All other current liabilities		1,348			1,493
Current liabilities		8,318			8,981
Long-term borrowings		8,233			8,436
Non-current compensation and benefits		5,455			5,782
Deferred income taxes		55			68
All other non-current liabilities		1,796			1,877
Total liabilities		23,858			25,144
Commitments and contingencies
Redeemable noncontrolling interests		177			165
Common stock, par value $0.01 per share, 1,000,000,000 shares authorized, 456,654,068 shares issued and outstanding as of June 30, 2024; 455,342,290 shares issued and outstanding as of December 31, 2023		5			5
Additional paid-in capital		6,540			6,493
Retained earnings		2,101			1,326
Accumulated other comprehensive income (loss) – net		(845	)		(691	)
Total equity attributable to GE HealthCare		7,801			7,133
Noncontrolling interests		16			12
Total equity		7,817			7,145
Total liabilities, redeemable noncontrolling interests, and equity	$	31,852		$	32,454

Condensed Consolidated Statements of Cash Flows (Unaudited)
	For the six months ended June 30
*(In millions)*		2024			2023
Net income	$	823		$	816
Adjustments to reconcile Net income to Cash from (used for) operating activities
Depreciation of property, plant, and equipment		137			124
Amortization of intangible assets		160			189
Gain on fair value remeasurement of contingent consideration		(10	)		(3	)
Net periodic postretirement benefit plan (income) expense		(180	)		(207	)
Postretirement plan contributions		(170	)		(180	)
Share-based compensation		70			52
Provision for income taxes		267			300
Cash paid during the year for income taxes		(287	)		(271	)
Changes in operating assets and liabilities, excluding the effects of acquisitions:
Receivables		112			(32	)
Due from related parties		19			10
Inventories		(116	)		(172	)
Contract and other deferred assets		12			(64	)
Accounts payable		(41	)		(40	)
Due to related parties		(57	)		(11	)
Contract liabilities		(20	)		111
Current compensation and benefits		(266	)		(114	)
All other operating activities – net		(155	)		(107	)
Cash from (used for) operating activities		300			401
Cash flows – investing activities
Additions to property, plant and equipment and internal-use software		(209	)		(213	)
Dispositions of property, plant, and equipment		—			1
Purchases of businesses, net of cash acquired		(259	)		(147	)
All other investing activities – net		(69	)		9
Cash from (used for) investing activities		(537	)		(350	)
Cash flows – financing activities
Net increase (decrease) in borrowings (maturities of 90 days or less)		—			(12	)
Newly issued debt, net of debt issuance costs (maturities longer than 90 days)		1			2,000
Repayments and other reductions (maturities longer than 90 days)		(156	)		(6	)
Dividends paid to stockholders		(28	)		(14	)
Redemption of noncontrolling interests		—			(211	)
Net transfers (to) from GE		—			(1,317	)
All other financing activities – net		(27	)		6
Cash from (used for) financing activities		(210	)		446
Effect of foreign currency rate changes on cash, cash equivalents, and restricted cash		(41	)		(3	)
Increase (decrease) in cash, cash equivalents, and restricted cash		(488	)		494
Cash, cash equivalents, and restricted cash at beginning of year		2,506			1,451
Cash, cash equivalents, and restricted cash as of June 30	$	2,018		$	1,945

Supplemental disclosure of cash flows information
Cash paid during the year for interest	$	(274	)	$	(250	)
Non-cash investing activities
Acquired but unpaid property, plant, and equipment	$	76		$	70

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. When read in conjunction with the Company’s U.S. GAAP results, these non-GAAP financial measures provide a baseline for analyzing trends in GE HealthCare’s underlying businesses and can be used by management as one basis for making financial, operational, and planning decisions. Descriptions of the reported non-GAAP measures are included below.

The Company reports Organic revenue and Organic revenue growth rate to provide management and investors with additional understanding and visibility into the underlying revenue trends of the Company’s established, ongoing operations, as well as provide insights into overall demand for its products and services. To calculate these measures, the Company excludes the effect of acquisitions, dispositions, and foreign currency rate fluctuations.

The Company reports EBIT, Adjusted EBIT, Adjusted EBIT margin, Adjusted net income, Adjusted net income margin, and Adjusted earnings per share to provide management and investors with additional understanding of its business by highlighting the results from ongoing operations and the underlying profitability factors, on a normalized basis. To calculate these measures the Company excludes, and reflects in the detailed reconciliations below, the following adjustments as applicable: Interest and other financial charges – net, Net (income) loss attributable to noncontrolling interests, Non-operating benefit (income) costs, Benefit (provision) for income taxes and certain tax related adjustments, and certain non-recurring and/or non-cash items. GE HealthCare may from time to time consider excluding other non-recurring items to enhance comparability between periods. Adjusted EBIT margin and Adjusted net income margin are calculated by taking Adjusted EBIT, or Adjusted net income, divided by Total revenues for the same period.

The Company reports Adjusted tax expense and Adjusted effective tax rate to provide investors with a better understanding of the normalized tax rate applicable to the business and provide more consistent comparability across periods. Adjusted tax expense excludes the income tax related to the pre-tax income adjustments included as part of Adjusted net income and certain income tax adjustments, such as adjustments to deferred tax assets or liabilities. The Company may from time to time consider excluding other non-recurring tax items to enhance comparability between periods. Adjusted effective tax rate is Adjusted tax expense divided by Income before income taxes less the pre-tax income adjustments referenced above.

The Company reports Free cash flow and Free cash flow conversion to provide management and investors with an important measure of the ability to generate cash on a normalized basis and provide insight into the Company’s flexibility to allocate capital. Free cash flow is Cash from (used for) operating activities including cash flows related to the additions and dispositions of property, plant, and equipment (“PP&E”) and additions of internal-use software. Free cash flow does not represent residual cash flows available for discretionary expenditures, due to the fact that the measure does not deduct the capital required for debt repayments. Free cash flow conversion is calculated by taking Free cash flow divided by Adjusted net income.

Management recognizes that these non-GAAP financial measures have limitations, including that they may be calculated differently by other companies or may be used under different circumstances or for different purposes. In order to compensate for the discussed limitations, management does not consider these measures in isolation from or as alternatives to the comparable financial measures determined in accordance with U.S. GAAP. The detailed reconciliations of each non-GAAP financial measure to the most directly comparable U.S. GAAP financial measure are provided below, and no single financial measure should be relied on to evaluate our business.

Non-GAAP Financial Reconciliations

Organic Revenue*
Unaudited	For the three months ended June 30							For the six months ended June 30
*($ In millions)*		2024			2023	% change			2024			2023	% change
Imaging revenues	$	2,596		$	2,620	(1	)%	$	5,062		$	5,116	(1	)%
Less: Acquisitions(1)		13			—				13			—
Less: Dispositions(2)		—			—				—			—
Less: Foreign currency exchange		(37	)		—				(64	)		—
Imaging Organic revenue*	$	2,620		$	2,620	—	%	$	5,113		$	5,116	—	%
Ultrasound revenues	$	823		$	839	(2	)%	$	1,647		$	1,698	(3	)%
Less: Acquisitions(1)		—			—				—			—
Less: Dispositions(2)		—			—				—			—
Less: Foreign currency exchange		(8	)		—				(13	)		—
Ultrasound Organic revenue*	$	831		$	839	(1	)%	$	1,659		$	1,698	(2	)%
PCS revenues	$	772		$	770	—	%	$	1,519		$	1,551	(2	)%
Less: Acquisitions(1)		—			—				—			—
Less: Dispositions(2)		—			—				—			—
Less: Foreign currency exchange		(2	)		—				(4	)		—
PCS Organic revenue*	$	775		$	770	1	%	$	1,523		$	1,551	(2	)%
PDx revenues	$	639		$	568	12	%	$	1,238		$	1,126	10	%
Less: Acquisitions(1)		—			—				—			—
Less: Dispositions(2)		—			—				—			—
Less: Foreign currency exchange		(7	)		—				(8	)		—
PDx Organic revenue*	$	646		$	568	14	%	$	1,246		$	1,126	11	%
Other revenues	$	9		$	20	(53	)%	$	24		$	33	(27	)%
Less: Acquisitions(1)		—			—				—			—
Less: Dispositions(2)		—			—				—			—
Less: Foreign currency exchange		—			—				—			—
Other Organic revenue*	$	9		$	20	(53	)%	$	24		$	33	(27	)%
Total revenues	$	4,839		$	4,817	—	%	$	9,489		$	9,524	—	%
Less: Acquisitions(1)		13			—				14			—
Less: Dispositions(2)		—			—				—			—
Less: Foreign currency exchange		(54	)		—				(89	)		—
Organic revenue*	$	4,881		$	4,817	1	%	$	9,565		$	9,524	—	%

(1)	Represents revenues attributable to acquisitions from the date the Company completed the transaction through the end of four quarters following the transaction.
(2)	Represents revenues attributable to dispositions for the four quarters preceding the disposition date.


Adjusted EBIT*
Unaudited	For the three months ended June 30								For the six months ended June 30
*($ In millions)*		2024			2023		% change			2024			2023		% change
Net income attributable to GE HealthCare	$	428		$	418		2	%	$	802		$	790		2	%
Add: Interest and other financial charges – net		131			137					254			273
Add: Non-operating benefit (income) costs		(101	)		(123	)				(204	)		(238	)
Less: Benefit (provision) for income taxes		(143	)		(137	)				(267	)		(300	)
Less: Net (income) loss attributable to noncontrolling interests		(7	)		(15	)				(21	)		(26	)
EBIT*	$	608		$	584		4	%	$	1,140		$	1,151		(1	)%
Add: Restructuring costs(1)		29			19					68			31
Add: Acquisition and disposition-related charges (benefits)(2)		(3	)		(2	)				(3	)		(1	)
Add: Spin-Off and separation costs(3)		67			72					126			130
Add: (Gain) loss on business and asset dispositions(4)		—			—					—			—
Add: Amortization of acquisition-related intangible assets		35			32					66			63
Add: Investment revaluation (gain) loss(5)		6			6					26			1
Adjusted EBIT*	$	742		$	711		4	%	$	1,423		$	1,375		3	%
Net income margin		8.9	%		8.7	%	20 bps			8.5	%		8.3	%	20 bps
Adjusted EBIT margin*		15.3	%		14.8	%	60 bps			15.0	%		14.4	%	60 bps

(1)	Consists of severance, facility closures, and other charges associated with restructuring programs.
(2)	Consists of legal, consulting, and other transaction and integration fees, and adjustments to contingent consideration, as well as other purchase accounting related charges and other costs directly related to the transactions.
(3)	Costs incurred in the Spin-Off and separation from GE, including system implementations, audit and advisory fees, legal entity separation, Founders Grant equity awards, separation agreements with GE, and other one-time costs.
(4)	Consists of gains and losses resulting from the sale of assets and investments.
(5)	Primarily relates to valuation adjustments for equity investments.


Adjusted Net Income*
Unaudited	For the three months ended June 30								For the six months ended June 30
*($ In millions)*		2024			2023		% change			2024			2023		% change
Net income attributable to GE HealthCare	$	428		$	418		2	%	$	802		$	790		2	%
Add: Non-operating benefit (income) costs		(101	)		(123	)				(204	)		(238	)
Add: Restructuring costs(1)		29			19					68			31
Add: Acquisition and disposition-related charges (benefits)(2)		(3	)		(2	)				(3	)		(1	)
Add: Spin-Off and separation costs(3)		67			72					126			130
Add: (Gain) loss on business and asset dispositions(4)		—			—					—			—
Add: Amortization of acquisition-related intangible assets		35			32					66			63
Add: Investment revaluation (gain) loss(5)		6			6					26			1
Add: Tax effect of reconciling items		(1	)		(3	)				(10	)		1
Add: Certain tax adjustments(6)		—			—					—			30
Adjusted net income*	$	459		$	419		10	%	$	872		$	807		8	%
Adjusted net income margin*		9.5	%		8.7	%	80 bps			9.2	%		8.5	%	70 bps

(1)	Consists of severance, facility closures, and other charges associated with restructuring programs.
(2)	Consists of legal, consulting, and other transaction and integration fees, and adjustments to contingent consideration, as well as other purchase accounting related charges and other costs directly related to the transactions.
(3)	Costs incurred in the Spin-Off and separation from GE, including system implementations, audit and advisory fees, legal entity separation, Founders Grant equity awards, separation agreements with GE, and other one-time costs.
(4)	Consists of gains and losses resulting from the sale of assets and investments.
(5)	Primarily relates to valuation adjustments for equity investments.
(6)	Consists of certain income tax adjustments, including the accrual of a deferred tax liability on the prior period earnings of certain of the Company’s foreign subsidiaries for which the Company is no longer permanently reinvested and the impact of adjusting deferred tax assets and liabilities to stand-alone GE HealthCare tax rates.


Adjusted Earnings Per Share*
Unaudited	For the three months ended June 30								For the six months ended June 30
*(In dollars, except shares outstanding presented in millions)*		2024			2023		$ change			2024			2023		$ change
Diluted earnings per share	$	0.93		$	0.91		$	0.02	$	1.75		$	1.33		$	0.42
Add: Deemed preferred stock dividend of redeemable noncontrolling interest		—			—					—			0.40
Add: Non-operating benefit (income) costs		(0.22	)		(0.27	)				(0.44	)		(0.52	)
Add: Restructuring costs(1)		0.06			0.04					0.15			0.07
Add: Acquisition and disposition-related charges (benefits)(2)		(0.01	)		(0.00	)				(0.01	)		(0.00	)
Add: Spin-Off and separation costs(3)		0.15			0.16					0.28			0.28
Add: (Gain) loss on business and asset dispositions(4)		—			—					—			—
Add: Amortization of acquisition-related intangible assets		0.08			0.07					0.14			0.14
Add: Investment revaluation (gain) loss(5)		0.01			0.01					0.06			0.00
Add: Tax effect of reconciling items		(0.00	)		(0.01	)				(0.02	)		0.00
Add: Certain tax adjustments(6)		—			—					—			0.07
Adjusted earnings per share*	$	1.00		$	0.92		$	0.09	$	1.90		$	1.76		$	0.14
Diluted weighted-average shares outstanding		459			458					459			458

(1)	Consists of severance, facility closures, and other charges associated with restructuring programs.
(2)	Consists of legal, consulting, and other transaction and integration fees, and adjustments to contingent consideration, as well as other purchase accounting related charges and other costs directly related to the transactions.
(3)	Costs incurred in the Spin-Off and separation from GE, including system implementations, audit and advisory fees, legal entity separation, Founders Grant equity awards, separation agreements with GE, and other one-time costs.
(4)	Consists of gains and losses resulting from the sale of assets and investments.
(5)	Primarily relates to valuation adjustments for equity investments.
(6)	Consists of certain income tax adjustments, including the accrual of a deferred tax liability on the prior period earnings of certain of the Company’s foreign subsidiaries for which the Company is no longer permanently reinvested and the impact of adjusting deferred tax assets and liabilities to stand-alone GE HealthCare tax rates.

Contacts

Investor Relations Contact:
Carolynne Borders

+1-631-662-4317

carolynne.borders@gehealthcare.com

Media Contact:
Jennifer Fox

+1-414-530-3027

jennifer.r.fox@gehealthcare.com

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