GE HealthCare Reports Third Quarter 2023 Financial Results
-- Revenue growth was 5% year-over-year; Organic revenue growth* of 6%
-- Net income attributable to GE HealthCare was $375 million versus $487
million for the prior year; Adjusted EBIT* $744 million versus $700
million
-- Net income margin was 7.8% versus 10.6% for the prior year; Adjusted
EBIT margin* was 15.4% versus Standalone EBIT margin* of 14.2%
-- Diluted EPS was $0.83 versus $1.07 for the prior year; Adjusted EPS*
was $0.99 versus Standalone Adjusted EPS* of $0.87
-- Cash flow from operating activities was $650 million versus $622
million for the prior year; Free cash flow* was $570 million versus $548
million
-- The Company raises low end of full-year Adjusted EPS* guidance range
CHICAGO----October 31, 2023--
GE HealthCare (Nasdaq: GEHC), a leading global precision care innovator, today reported financial results for the third quarter ended September 30, 2023.
GE HealthCare President and CEO Peter Arduini said, “We delivered another strong quarter of revenue growth with margin performance demonstrating progress on productivity and price. Cash performance was strong as we leveraged lean principles to improve inventory management. We remain confident in our 2023 outlook as we continue to innovate for customers and patients.”
Third Quarter 2023 Total Company Financial Performance
-- Revenues of $4.8 billion increased 5% reported and 6% on an Organic
basis* year-over-year, driven by volume and price.
-- Total company book-to-bill, defined as Total orders divided by Total
revenues, was 1.03 times for the quarter, as orders dollars outpaced
revenues. Total company orders increased 1% organically.
-- Net income attributable to GE HealthCare was $375 million versus $487
million for the prior year, and Adjusted EBIT* was $744 million versus
$700 million.
-- Net income margin was 7.8% versus 10.6% for the prior year, down 280
basis points ("bps") primarily impacted by standalone interest expense.
Adjusted EBIT margin* was 15.4% versus 15.3%, up 10 bps. Adjusted EBIT
margin* for the third quarter of 2023 increased 120 bps versus the
Company's estimated 3Q'22 Standalone Adjusted EBIT margin* of 14.2%.
Margin was driven by productivity and price, and partially offset by
planned investments and inflation.
-- Earnings per share ("EPS") from continuing operations were $0.83 versus
$1.07, down $0.24 from the prior year. Adjusted EPS* was $0.99 versus
$1.20, down $0.21 from the prior year. Both comparisons were impacted by
standalone interest expense. Adjusted EPS* for the third quarter of 2023
grew $0.12 versus the Company's estimated 3Q'22 Standalone Adjusted EPS*
of $0.87 with increased volume.
-- Cash flow from operating activities was $650 million versus $622
million, up $28 million year-over-year primarily due to strong inventory
management. Free cash flow* was $570 million, up $22 million
year-over-year.
Third Quarter 2023 Segment Financial Performance
Imaging
-- Revenues of $2.6 billion increased 5% on both a reported and Organic
basis* year-over-year.
-- Revenue growth was driven by Molecular Imaging and Computed Tomography
as well as Magnetic Resonance, due to supply chain improvements, price,
and new product introductions.
-- Segment EBIT was $318 million versus $267 million for the prior year.
-- Segment EBIT margin was 12.1% versus 10.6% for the prior year, with
progress on productivity, price, and volume, partially offset by planned
investments.
Ultrasound
-- Revenues of $815 million declined 1% on both a reported and Organic
basis*, following double-digit growth in the prior period.
-- Segment EBIT was $179 million versus $211 million for the prior year.
-- Segment EBIT margin was 22.0% versus 25.6% for prior year due to
planned investments including Caption Health and inflation, partially
offset by productivity improvements.
Patient Care Solutions
-- Revenues of $764 million increased 9% on both a reported and Organic
basis* year-over-year.
-- Strong revenue growth from volume, due to supply chain fulfillment
improvements and progress on price.
-- Segment EBIT was $80 million versus $65 million for the prior year.
-- Segment EBIT margin was 10.5% versus 9.3% for the prior year, driven by
productivity, volume, and price, partially offset by planned investments
and inflation.
Pharmaceutical Diagnostics
-- Revenues of $589 million increased 13% reported and 12% on an Organic
basis* year-over-year.
-- Strong revenue growth driven by pricing actions and continued volume.
-- Segment EBIT of $166 million versus $159 million for the prior year.
-- Segment EBIT margin was 28.2% versus 30.5% for the prior year, due to
raw material inflation and planned investments, partially offset by price,
productivity, and volume.
Growth and Innovation
-- GE HealthCare and Novo Nordisk to Collaborate to Advance Novel
Non-Invasive Treatment for Type 2 Diabetes and Obesity with Ultrasound
-- GE HealthCare's growing list of medical institutions conducting human
subject research studies with its novel photon counting CT[i] technology
further expands with the addition of Stanford Medicine
-- GE HealthCare Launches Enhanced Venue Family Point-of-Care Ultrasound
Systems Featuring AI-Driven Caption Guidance
-- GE HealthCare Awarded a $44 Million Grant to Develop Artificial
Intelligence-Assisted Ultrasound Technology Aimed at Improving Outcomes
in Low-and-Middle-Income Countries
-- Mayo Clinic and GE HealthCare enter strategic collaboration to advance
innovation in medical imaging and theranostics
-- GE HealthCare Introduces Vscan Air SL, a Wireless Handheld Ultrasound
Device for Rapid Assessments of Cardiac and Vascular Patients
-- GE HealthCare Launches CardioVisio for Atrial Fibrillation, a Digital,
Patient-Centric Clinical Decision Support Tool to Enable Precision Care
-- GE HealthCare Receives FDA Clearance for Portrait Mobile, A
First-Of-Its-Kind, Wireless Monitoring Solution Aiding Early Detection of
Patient Deterioration
2023 Guidance
Full year 2023 guidance is as follows:
-- Organic revenue growth* in the range of 6% to 8% 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 $3.75 to $3.85, raising the low end of
range, and representing 11% to 14% growth versus Standalone Adjusted EPS*
of $3.38 for 2022. The prior range was $3.70 to $3.85.
-- 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 up to 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.
Condensed Consolidated and Combined
Statements of Income (Unaudited)
For the three months For the nine months
ended September 30 ended September 30
----------------------- ------------------------
(In millions,
except per share
amounts) 2023 2022 2023 2022
----------------- ----------- ---------- ----------- -----------
Sales of products $3,186 $3,012 $ 9,530 $ 8,702
Sales of services 1,636 1,564 4,816 4,701
----------------- ----- --- ----- ------ ------
Total revenues 4,822 4,576 14,346 13,403
----------------- ----- --- ----- ------ ------
Cost of products 2,076 1,995 6,197 5,825
Cost of services 811 808 2,383 2,331
----------------- ----- --- ----- ------ ------
Gross profit 1,935 1,773 5,766 5,247
----------------- ----- --- ----- ------ ------
Selling, general,
and
administrative 996 908 3,130 2,747
Research and
development 322 260 890 755
----------------- ----- --- ----- ------ ------
Total operating
expenses 1,318 1,168 4,020 3,502
----------------- ----- --- ----- ------ ------
Operating income 617 605 1,746 1,745
Interest and
other financial
charges -- net 138 2 411 18
Non-operating
benefit (income)
costs (94) (1) (332) (4)
Other (income)
expense -- net (63) (18) (85) (63)
----------------- ----- ----- ------ ------
Income from
continuing
operations
before income
taxes 636 622 1,752 1,794
Benefit
(provision) for
income taxes (250) (129) (550) (412)
----------------- ----- ----- ------ ------
Net income from
continuing
operations 386 493 1,202 1,382
----------------- ----- --- ----- ------ ------
Income (loss)
from
discontinued
operations, net
of taxes (4) -- (4) 12