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GE Healthcare Technologies - $GEHC - Earnings Analysis: Robust orders growth and record backlog indicate strong demand.

By sagebytes in Business —

Business Model

GE HealthCare generates revenue primarily through the sale of medical equipment, pharmaceutical diagnostics, and associated services across four main segments: Imaging, Advanced Visualization Solutions (AVS), Patient Care Solutions (PCS), and Pharmaceutical Diagnostics (PDx).

Revenue Sources

  • Sales of Imaging equipment such as MRI, CT scanners, and X-ray systems.
  • Sales of Advanced Visualization Solutions including ultrasound and interventional equipment.
  • Sales of Patient Care Solutions including monitoring equipment and life support systems.
  • Sales of Pharmaceutical Diagnostics products including contrast agents.
  • Provision of maintenance and repair services, training, and software solutions.

Income Statement Analysis

  • Revenue increased by 2% year-over-year driven by demand in Advanced Visualization Solutions and Pharmaceutical Diagnostics segments.
  • Operating income increased by 16% due to productivity improvements and higher volume.
  • Net income attributable to GE HealthCare increased by 79% primarily due to improved EBIT and lower interest expense.
  • Diluted EPS increased by 78% from $0.88 to $1.57.

Balance Sheet Analysis

  • Total assets increased by 2% year-over-year due to growth in cash and equivalents, and property, plant, and equipment.
  • Total stockholders' equity increased by 18% primarily due to retained earnings.
  • Total liabilities decreased by 3% mainly due to a reduction in long-term borrowings.

Cash Flow Analysis

  • Net cash provided by operating activities decreased by 7% due to changes in working capital, particularly inventory build-up.
  • Net cash used in investing activities increased due to higher capital expenditures and acquisitions.
  • Net cash used in financing activities increased due to debt repayments and dividends paid to stockholders.

Capital Allocation

GE HealthCare invested $1.3 billion in R&D during 2024, focusing on innovation and new product introductions. The company repaid $400 million of debt in 2024 and an additional $250 million in Q1 2025. Management is pursuing strategic acquisitions, including the planned acquisition of Nihon Medi-Physics (NMP).

Management Commentary

We were pleased with the strong momentum in orders, backlog and book-to-bill that we saw in the fourth quarter.

We remain committed to our precision care strategy for growth, supported by innovation, productivity initiatives, and commercial execution.

We're starting 2025 with strong momentum in orders, record backlog and book-to-bill.

We're taking a measured approach to guidance as we start the year and see how the market dynamics including China improvement and tariffs evolve.

Overall Sentiment: Positive, with cautious optimism regarding market dynamics and the impact of tariffs and China market conditions.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.