GE HealthCare’s second quarter results were met with a negative market reaction, despite revenue and non-GAAP profit exceeding Wall Street expectations. Management attributed revenue growth to strong demand in the U.S. and EMEA, robust performance in Imaging and Advanced Visualization Solutions, and record backlog levels. However, CEO Peter Arduini cautioned that margin pressure from tariffs and unfavorable mix within certain product lines offset much of the top-line momentum. CFO Jay Saccaro noted that, “tariffs accounted for about half of the year-over-year gross margin decline,” and flagged increased product investments and service contract startup costs as additional margin headwinds.
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GE HealthCare (GEHC) Q2 CY2025 Highlights:
- Revenue: $5.01 billion vs analyst estimates of $4.96 billion (3.5% year-on-year growth, 1% beat)
- Adjusted EPS: $1.06 vs analyst estimates of $0.92 (15.5% beat)
- Adjusted EBITDA: $837.8 million vs analyst estimates of $797.8 million (16.7% margin, 5% beat)
- Management raised its full-year Adjusted EPS guidance to $4.53 at the midpoint, a 13.2% increase
- Operating Margin: 13.1%, in line with the same quarter last year
- Organic Revenue rose 2% year on year, in line with the same quarter last year
- Market Capitalization: $33.33 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From GE HealthCare’s Q2 Earnings Call
- Vijay Muniyappa (Evercore ISI) asked about regional capital spending trends, with CEO Peter Arduini noting robust U.S. demand driven by replacement cycles and productivity needs, while China’s recovery remains slow but promising for the long term.
- Joanne Wuensch (Citi) questioned order growth deceleration, with CFO Jay Saccaro emphasizing that quarterly lumpiness is expected due to large enterprise deals, but the overall multi-quarter trend supports mid-single-digit growth aspirations.
- Lawrence Biegelsen (Wells Fargo) inquired about gross margin headwinds, and Saccaro explained that tariffs, higher product investments, and lower initial service margins from new contracts were the main factors, expecting improvement as new offerings scale.
- Robert Marcus (JPMorgan) sought clarity on China’s outlook and ex-China growth, with Arduini reiterating a cautious view on China’s pace but emphasizing new leadership and product launches as future growth drivers.
- Rick Wise (Stifel) asked about the Photon Counting CT launch timeline, and Arduini confirmed plans remain on track for a second-half 2025 filing, highlighting differentiated capabilities expected to drive adoption and margin benefits.
Catalysts in Upcoming Quarters
Looking ahead, our analysts will be focused on (1) the pace and commercial impact of new product launches in imaging and monitoring, (2) evidence that tariff mitigation actions are flowing through to margins, and (3) any signs of improved tender activity or backlog conversion in China. Progress on strategic M&A and successful integration of key acquisitions will also be important markers for sustained growth.
GE HealthCare currently trades at $73, down from $77.77 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
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