GE HealthCare Technologies Inc. (GEHC) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary reveals strong financial performance with raised EPS guidance, robust free cash flow expectations, and organic revenue growth. Positive developments include new AI-driven product launches, improved margins in key segments, and significant R&D investments. The Q&A section highlights cautious but optimistic management, with promising product feedback and strategic growth plans. Despite some uncertainties in China and vague management responses, the overall sentiment is positive, with strong innovation and market expansion plans likely to boost the stock price.
Key Financial Performance
Revenue for Q4 2025 $5.7 billion, which grew 4.8% organically year-over-year. Growth was driven by strong execution in EMEA and the U.S., particularly in nuclear medicine.
Adjusted EBIT margin for Q4 2025 16.7%, down 200 basis points year-over-year. Margin was negatively impacted by approximately $100 million in tariff expense as well as unfavorable mix. This was partially offset by volume and price.
Adjusted EPS for Q4 2025 $1.44 per share, down 0.7% year-over-year, including approximately $0.17 of tariff impact. Excluding this impact, adjusted EPS grew 11%.
Free cash flow for Q4 2025 $916 million, up $105 million year-over-year, which included an approximate $90 million tariff impact.
Revenue for full year 2025 $20.6 billion with organic growth of 3.5% year-over-year. Growth was supported by strong end markets, particularly in the U.S. and EMEA.
Adjusted EBIT margin for full year 2025 15.3%, declined 100 basis points year-over-year. Excluding tariff impacts, adjusted EBIT margin would be up 20 basis points for the year.
Adjusted EPS for full year 2025 $4.59, grew 2.2% year-over-year. Excluding tariff impacts, adjusted EPS would grow 12%.
Free cash flow for full year 2025 $1.5 billion, which included approximately $285 million tariff impact. Free cash flow conversion was 72%.
Imaging segment organic revenue for Q4 2025 5.3% growth year-over-year, driven by strong execution in EMEA and the U.S., particularly in nuclear medicine. EBIT margin was negatively impacted by tariffs but improved sequentially.
Advanced Visualization Solutions organic revenue for Q4 2025 4.2% growth year-over-year, with strong performance in the U.S. and EMEA. EBIT performance was driven by volume growth and productivity gains, offset by tariffs and inflation.
Patient Care Solutions organic revenue for Q4 2025 Declined 1.1% year-over-year due to a decline in Life Support Solutions. EBIT margin improved sequentially but declined 380 basis points year-over-year, largely due to unfavorable mix and tariffs.
Pharmaceutical Diagnostics organic revenue for Q4 2025 12.7% growth year-over-year, driven by global growth in contrast media, pricing execution, and adoption of the U.S. radiopharmaceutical MPI portfolio. EBIT grew 10%.
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Operating Highlights
New Product Vitality Rate: The 3-year vitality rate for new products is strong at 55%, up approximately 5% from the prior year. This indicates that 55% of revenue is coming from new products.
Product Launches: Omni total body PET and next-gen SPECT are commercially available in Europe. Photonovo Spectra Photon Counting CT and Cigna MR with Freelium are on track for regulatory timelines. Vivid Pioneer cardiovascular ultrasound system and Flyrcado for myocardial perfusion are contributing to growth.
Flyrcado Progress: Flyrcado ramp has been progressing well, with consistent delivery rates of approximately 95%. Weekly dose rates are expected to increase throughout the year, with a long-term revenue opportunity of $1 billion.
Enterprise Deals: More than $7 billion in enterprise deals globally since the company’s spin-off. Notable agreements include a multiyear deal with the Ministry of Health in Indonesia to install over 300 advanced CT scanners.
Geographic Expansion: Strong demand in the U.S. and EMEA markets. Collaboration with Sutter Health and other large-scale agreements are driving growth.
Operational Efficiency: Heartbeat business system implemented to improve productivity and customer experience. Achieved a 25% monthly improvement in past due backlog, translating into better sales and cash conversion.
Tariff Mitigation: Shifted production lines to more favorable geographies, enhancing manufacturing flexibility and reducing tariff impacts.
Acquisitions: Planned acquisition of Intelerad to enhance cloud-first imaging ecosystem. Intelerad is expected to generate $270 million in revenue in its first full year of ownership, growing in the low double digits with an adjusted EBITDA exceeding 30%.
Recurring Revenue Focus: Acquisitions like Nihon Medi-Physics and icometrix are expected to drive recurring revenue and supplement top-line growth.
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Risk or Challenges
Tariff Expenses: The company faced significant tariff expenses amounting to $245 million for the year, which negatively impacted EBIT margins and adjusted EPS. This challenge required mitigation actions such as shifting production to more tariff-efficient geographies.
Unfavorable Product Mix: Margins were negatively impacted by an unfavorable product mix, particularly in Patient Care Solutions and Imaging segments.
Supply Chain Challenges: The company faced challenges related to site readiness and delivery of products, which impacted past due backlog. Efforts to improve visibility and alignment with factories were necessary to address these issues.
Economic Uncertainty in China: The company has taken a cautious outlook on China due to economic uncertainties, which could impact revenue growth in 2026.
Regulatory and Product Launch Timelines: The company is managing regulatory timelines for new product launches, which are critical for maintaining competitive advantage and revenue growth.
Inflationary Pressures: Inflationary pressures affected EBIT performance, particularly in Advanced Visualization Solutions and Patient Care Solutions segments.
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Guidance & Outlook
Revenue Growth for 2026: Expected organic revenue growth of 3% to 4%, reflecting a healthy capital equipment environment and cautious outlook on China. Foreign exchange expected to benefit revenue by approximately 150 basis points.
Adjusted EBIT Margin for 2026: Expected to be in the range of 15.8% to 16.1%, reflecting 50 to 80 basis points of expansion. Tariff impact expected to be less than 2025.
Adjusted EPS for 2026: Expected to be in the range of $4.95 to $5.15, representing 8% to 12% growth.
Free Cash Flow for 2026: Anticipated to be approximately $1.7 billion, representing growth of 13%.
First Quarter 2026 Revenue Growth: Expected year-over-year organic revenue growth in the range of 2% to 3%. Mid-single-digit adjusted EPS growth expected driven by an increase in volume.
Product Pipeline and Innovation: Robust pipeline of new product introductions expected to drive future orders growth beginning in 2026.
Flyrcado Revenue Projections: Confidence in delivering $500 million or more in Flyrcado revenue by year-end 2028, with a long-term opportunity of $1 billion for this novel molecule.
Tariff Mitigation Actions: Continued actions in 2026, including supply chain shifts, product transfers to more tariff-efficient geographies, and expansion of duty-free USMCA efforts.
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Shareholder Return Plan
Dividend Program: During the year, GE HealthCare returned capital through its dividend program. However, specific details about the dividend amount or frequency were not provided in the transcript.
Share Repurchase Program: GE HealthCare authorized a new share repurchase program in April 2025. Since its authorization, the company has repurchased $200 million in shares at an average price of $71, demonstrating confidence in its business strategy to drive shareholder returns over time.
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Key Q&A
Q:Can you provide more details about the 2% order growth and the outlook for orders and book-to-bill into 2026?
A:The order book performance in Q4 was strong with a book-to-bill ratio of 1.06x in Q4 and 1.07x on a trailing 12-month basis. The backlog reached a record level, up $2 billion year-over-year. Order growth was solidly in the mid-single digits on a trailing 12-month basis. Management expects a difficult comparison in Q1 2026 due to the Sutter deal but anticipates acceleration in the second half of the year with new product launches. Sales impact is expected to be significant in 2027.
Q:What is the current state of Flyrcado and its adoption in existing workflows?
A:Flyrcado has received positive feedback for its image quality, specificity, sensitivity, and convenience. The company has focused on achieving a 95% on-time delivery rate before expanding its customer base. Weekly doses were approximately 220 as of January 23rd, and the company plans to increase doses and bring on more CMOs to expand geographically.
Q:What are the assumptions for China and potential EPS upside for 2026?
A:China's performance in the second half of 2025 was in line with expectations, with Q4 being the most challenging due to prior year growth. Management is taking a cautious approach, anticipating a decline in China for 2026. EPS guidance for 2026 includes $0.30 from volume growth, $0.30 from cost and productivity initiatives, and offsets from growth investments. New products like Flyrcado and AVS launches are expected to contribute to sales in the second half of 2026.
Q:Why does the 2026 organic growth guidance of 3% to 4% align with 2025's performance?
A:The 2026 guidance aligns with 2025's performance due to a strong backlog, cautious assumptions for China, and the timing of new product approvals. Management expects growth to accelerate later in the year as new products are launched and backlog is converted into sales.
Q:What is the timing for orders and sales of Photon Counting and other new product introductions?
A:The timelines for significant product launches are on track, with the biggest contributions expected in 2027. Some impact is anticipated later in 2026. Products like Allia Moveo, Omni total body PET, StarGuide GX, and others are progressing well, with approvals and installations underway.
Q:How does the company plan to achieve its midterm targets of mid-single-digit revenue growth and high teens to 20% adjusted EBITDA margin?
A:The company expects new products to drive 1 to 2 points of additional sales growth over the medium term. Margin expansion will be supported by higher-margin NPIs, productivity improvements, and optimized SG&A. The company is committed to achieving its midterm targets despite challenges like tariffs.
Q:What is the composition of service revenue and its impact on the company's broader revenue?
A:Service revenue grew 6% in 2025, driven by price, volume, and improved capture rates. New products with advanced technology are expected to increase service contract capture rates. The company sees service revenue as a critical component of sustainable revenue and profit growth.
Q:What are the inputs into the 2026 top-line guidance, including price and the Intelerad acquisition?
A:The 2026 guidance includes price advancements but no significant step-ups. New products are expected to contribute to price and mix. The Intelerad acquisition, expected to close in H1 2026, will enhance cloud-enabled AI solutions and outpatient network capabilities. The deal is expected to be neutral to financial performance for the year.
Q:What is the state of the medical technology market and the hospital CapEx environment?
A:The U.S. capital backdrop is solid, driven by investments in aging installed bases and strong procedure trends. European markets have shown recovery, and emerging markets are robust. The company has not observed significant impacts from changes to the Affordable Care Act.
Q:How does the company address concerns about order growth in Q4 and its impact on 2026 performance?
A:Order growth in Q4 was influenced by the timing of new product launches, with some customers waiting for approvals. The backlog growth and strong sales execution in Q4 set up a positive outlook for 2026.
Q:What is the outlook for Omnipaque and the broader PDx business?
A:The PDx business, including Omnipaque, performed well in Q4, driven by procedure growth. Flyrcado is not yet a significant contributor but is expected to grow as CMO capabilities expand. The contrast media market remains tight, with no significant new entrants observed.
Q:What are the assumptions for Flyrcado and China in the 2026 guidance?
A:Flyrcado is expected to grow as weekly doses increase and new customers are onboarded. China is anticipated to decline in 2026, with management taking a cautious approach despite some commercial progress.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the financial impact of Flyrcado and other new products, stating that they would not give guidance on individual products. Additionally, while they mentioned a cautious approach to China, they did not specify the exact decline anticipated. The response to the question about the timing of orders and sales for Photon Counting and other NPIs was also vague, with no precise timelines or figures provided.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Flyrcado
Health
NPIs
PET imaging
SPECT
Slide EMEA
Slide progress
Solutions Slide
backlog book
basis product
capital equipment
cloud
collaboration
contrast medium
customer experience
disease state
dos
end market
enterprise deal
equipment environment
example Heartbeat
expansion
flow tariff
future
geography
increase
medium radiopharmaceutical
offering
pillar
portfolio EBIT
problem
product hold
production
profitability
record backlog
result Slide
service order
site readiness
spin
surgery
system Heartbeat
volume price
GEHC Transcript
GE HealthCare Technologies Inc. (GEHC) Q4 2025 Earnings Call Transcript
Positive2-4
The earnings call summary reveals strong financial performance with raised EPS guidance, robust free cash flow expectations, and organic revenue growth. Positive developments include new AI-driven product launches, improved margins in key segments, and significant R&D investments. The Q&A section highlights cautious but optimistic management, with promising product feedback and strategic growth plans. Despite some uncertainties in China and vague management responses, the overall sentiment is positive, with strong innovation and market expansion plans likely to boost the stock price.
GE HealthCare Technologies Inc. (GEHC) Presents at 44th Annual J.P. Morgan Healthcare Conference Transcript
Neutral1-13
GE HealthCare Technologies Inc. (GEHC) Presents at Jefferies London Healthcare Conference 2025 Transcript
Neutral11-18
GE HealthCare Technologies Inc. (GEHC) Q3 2025 Earnings Call Transcript
Positive10-29
The earnings call reveals strong financial metrics, optimistic guidance, and strategic advancements in nuclear medicine and AI integration, suggesting positive stock movement. Despite some uncertainties in tariff mitigation and competitive impact, raised guidance for revenue, EBIT margin, and EPS, alongside new product launches, supports a positive outlook.
GEHC Slides
GEHC Report
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