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    GEHC
    Earnings call· Sep 2025(Q3 FY25)

    GE HealthCare Technologies Inc. GEHC

    Oct 29, 2025 Source

    Executive summary

    GE HealthCare Q3 FY25 — Robust Orders and Raised EPS Guidance

    GE HealthCare delivered solid Q3 FY25 results, driven by strong commercial execution and demand for innovative solutions, leading to robust organic revenue and orders growth. Despite significant tariff headwinds and a product hold in PCS, the company raised its full-year adjusted EPS guidance, reflecting confidence in its strategic investments in R&D and operational efficiency. The focus remains on accelerating future top and bottom-line growth through new product introductions and leveraging AI capabilities.

    Highlights

    5

    • Organic revenue grew 4% year-over-year, ahead of expectations.

    • Robust organic orders growth of 6% year-over-year, with a strong book-to-bill of 1.06x.

    • Adjusted EPS guidance raised for the full year 2025 to $4.51-$4.63 per share.

    • AVS segment organic revenue up 6% and EBIT margin up 180 bps, driven by new AI-powered products.

    • Pharmaceutical Diagnostics organic sales grew 10% year-over-year.

    Concerns

    4

    • Adjusted EBIT margin declined 150 bps year-over-year to 14.8%, primarily due to $95 million in tariff impact.

    • Adjusted gross margin declined 300 bps year-over-year due to tariffs and reclassification of R&D costs to COGS.

    • Patient Care Solutions (PCS) organic revenue was down 7% year-over-year, primarily due to a product hold.

    • Flyrcado 2025 revenue will be short of the initial $30 million target due to supply and workflow ramp-up challenges.

    Guidance & targets

    11
    CategoryTargetConfidence
    Full-year 2025 Organic Revenue Growth
    approximately 3%
    high materiality
    High
    Full-year 2025 FX Tailwind to Revenue
    50 basis point tailwind
    medium materiality
    High
    Full-year 2025 Adjusted EBIT Margin
    15.2% to 15.4%
    high materiality
    High
    Full-year 2025 Adjusted Effective Tax Rate
    20% to 21%
    medium materiality
    High
    Full-year 2025 Adjusted EPS
    $4.51 and $4.63 per share
    high materiality
    High
    Full-year 2025 Free Cash Flow
    at least $1.4 billion
    high materiality
    High
    Full-year 2025 Tariff Impact on Adjusted EPS
    approximately $0.45
    high materiality
    High
    Flyrcado Revenue
    $0.5 billion
    high materiality
    High
    Flyrcado Revenue Potential
    $1 billion
    high materiality
    Medium
    Full-year 2026 Revenue Growth
    grow faster than 3%
    high materiality
    Medium
    Full-year 2026 Tariff Impact
    less than that next year
    high materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Imaging
    Driven by strong commercial execution in EMEA and the U.S., as imaging equipment remains a top investment priority for customers. Sequentially, both revenue and margin increased.
    		—4% organic—declined 260 basis points YoY
    Advanced Visualization Solutions (AVS)
    Strong performance in the U.S. and demand for new products. Driven by volume growth and cost productivity. Fourth consecutive quarter of year-over-year sales and margin growth. AI-enabled products contributing significantly to revenue growth and margin expansion.
    		—6% organic—increased 180 basis points YoY
    Patient Care Solutions (PCS)
    Primarily due to a product hold, unfavorable product mix, and tariffs. The product hold has been resolved, and shipments have resumed. Expect meaningful sequential improvement in EBIT margin in the fourth quarter with new leadership.
    		—down 7% organic—declined 680 basis points YoY
    Pharmaceutical Diagnostics (PDx)
    Driven by solid performance in contrast media and radiopharmaceutical portfolios, contributing to recurring revenue. Margin decline due to planned investments in NPIs such as Flyrcado and the Nihon Medi-Physics acquisition.
    EBIT growth: 14%
    		—10% organic—declined 150 basis points YoY

    Operational metrics

    27
    Backlog
    $21.2 billion
    Q3 FY25

    Exited the quarter with a solid backlog, good indicator of future growth.

    Book-to-bill
    1.06x
    Q3 FY25

    Strong book-to-bill, good indicator of future growth.

    Organic orders growth
    6%YoY
    Q3 FY25

    Robust growth across all segments, reflecting solid customer demand and healthy capital equipment environment.

    Trailing 4-quarter average orders growth
    6%
    Q3 FY25
    Adjusted EBIT margin
    14.8%down 150 basis points year-over-year
    Q3 FY25

    Impacted by tariffs, partially offset by favorable volume and pricing.

    Adjusted EBIT margin (excluding tariff impact)
    expanded approximately 30 basis points
    Q3 FY25

    Excluding the tariff impact of 180 basis points.

    Adjusted EPS
    $1.07down 6% year-over-year
    Q3 FY25

    Included approximately $0.16 of tariff impact.

    Adjusted EPS (excluding tariff impact)
    up in the high single digits year-over-year
    Q3 FY25
    Free cash flow conversion
    99%
    Q3 FY25
    Tariff impact
    $95 million
    Q3 FY25
    Tariff impact on EBIT margin
    180 basis points
    Q3 FY25
    Adjusted gross margin
    declined 300 basis points year-over-year
    Q3 FY25

    Primarily due to tariff impact and investments (R&D reclassification).

    R&D to COGS reclassification impact on gross margin
    60 basis points
    Q3 FY25

    Movement between R&D and cost of goods as products move closer to commercialization.

    R&D spend
    more than $3 billion
    since 2022

    Invested to deliver differentiated products and solutions.

    R&D and product program spend in R&D
    70%
    Q3 FY25

    Of total engineering and product program spend.

    R&D and product program spend in COGS
    30%
    Q3 FY25

    Remaining aspect of total engineering and product program spend.

    Tariff mitigation
    approximately 50%
    2025

    Mitigated through strategic initiatives.

    Share repurchases
    approximately $100 million
    Q3 FY25

    Reflecting confidence in growth prospects.

    Digital revenue expansion target
    from $1.2 billion to $1.8 billion
    by '28

    Well on track, remains an important growth engine.

    AI-enabled FDA device authorizations
    100up from 85 last year
    Q3 FY25

    Pleased with progress, an important unlocker.

    PCS product hold impact on sales
    5%
    Q3 FY25
    PCS product hold impact on margin
    about half
    Q3 FY25

    Of the margin decline year-over-year related to this product hold.

    Flyrcado 2025 revenue
    short of the $30 million
    2025

    Initial target for 2025 will not be met due to deliberate 'slow to go fast' strategy.

    Flyrcado manufacturing yield target
    95%-plus
    near future

    Working to achieve consistent yield for exceptional customer experience.

    Historical Q3 to Q4 revenue step-up
    about a 9%
    historical

    Modeling at the midpoint for Q4 FY25.

    Q4 revenue secured rate (equipment)
    about 80%
    Q4 FY25

    Secured for Q4 FY25, consistent with historic levels.

    Total tariff impact
    $265 million
    FY25

    Expected for the full year.

    Industry KPIs

    10
    MetricValueDetails
    Tariff impact$95 millionUSD
    Pricing realized pricesustained pricing momentum
    New product launch rampFlyrcado
    Procedure volume growthhealthy
    FCF conversion leverage guidance99%%
    Installed base system placementsrecord backlogs
    Segment franchise organic growth4%%
    Consumables recurring revenue mixgrowing recurring revenue profile
    Indicated addressable patient population$1 billionUSD
    Pivotal trial clinical evidence milestonesPhoton Counting CT

    Product announcements

    5
    ProductTypeDetails
    Allia (redesigned Interventional Cardiology system)update
    Vivid Pioneer (cardiovascular ultrasound platform)launch
    Anesthesia delivery system (refreshed)launch
    Monitoring platformlaunch
    CareIntellect for perinatallaunch

    Deals & partnerships

    3
    UC San Diego Health14-year Care Alliance focused on early detection and advancing cancer care.nearly $0.5 billion in future revenue (part of total large system deals)14-year

    Leverages broad portfolio and service capabilities to deepen customer relationships, focused on imaging solutions and novel therapies such as theranostics.

    icometrixPlanned acquisition of digital tools to help clinicians detect and quantify potential high-risk side effects in patients undergoing Alzheimer's therapies.

    Integrates icometrix technologies into MR systems, aligning with increasing global approvals of Alzheimer's therapies and demand for MRI exams and PET amyloid agent Vizamyl.

    CDL (CardioNavix)Distribution agreement for Flyrcado.

    CDL is an outpatient cardiology leader accounting for about 1/3 of the current U.S. PET procedures. Commercial and clinical teams are working to transition customer volume in the coming quarters.

    Risks & headwinds

    4
    Tariff impactQ3 FY25, FY25, FY26

    $95 million in Q3 FY25; $0.16 impact on Q3 adjusted EPS; $0.45 impact on FY25 adjusted EPS; $265 million total tariff impact for FY25.

    Mitigation: Mitigated ~50% of 2025 gross exposure. On track for lower net tariff impact in 2026 vs. 2025. Initiatives include sourcing from lower-cost regions, second sources, value engineering, site transfers, price increases, USMCA certification, free trade zones, selective pricing.

    Patient Care Solutions (PCS) product holdQ3 FY25, Q4 FY25

    Organic revenue down 7% YoY (5% due to product hold); EBIT margin declined 680 bps YoY (half due to product hold).

    Mitigation: Product hold resolved, shipments resumed. New leadership focused on growth and margin performance. Meaningful sequential improvement expected in Q4.

    Flyrcado slower-than-expected ramp2025

    2025 revenue will be short of $30 million target.

    Mitigation: Deliberate "slow to go fast" strategy prioritizing customer experience, achieving consistent 95%+ manufacturing yield, and optimizing customer workflow integration. Long-term targets ($0.5B by 2028, potential $1B) remain intact.

    China market challengesH2 FY25

    H2 FY25 sales lower than H1.

    Mitigation: Investments in market access capabilities, renewed focus on clinical selling. Optimistic about long-term potential.

    What to watch in Q4 FY25

    5

    Patient Care Solutions (PCS) organic revenue growth

    Q4 FY25
    CurrentDown 7% (Q3 FY25)
    TargetMeaningful sequential improvement

    Why it matters

    PCS performance was a significant drag on Q3 results; its recovery is crucial for overall company growth and margin expansion.

    organic revenue was down 7% versus the prior year, primarily due to a product hold. This hold has now been resolved and shipments for the impacted products have resumed, positioning us for a sequential sales step-up in the fourth quarter.

    Q&A highlights

    7

    Seeking additional color on China trends, long-term view, and potential risk mitigation strategies given media reports.

    Management noted improving stimulus and tender activity, with recovery ongoing. H2 FY25 sales in China are expected to be lower than H1. They are optimistic about long-term potential due to market size and healthcare needs, and continuously assess portfolio fit.

    “the market has been challenged over the past 2 years due to stimulus as well as the anticorruption campaign. That said, we don't see any structural reason to prevent China market returning from growth.”

    asked by Lawrence Biegelsen (Wells Fargo) · answered by Peter Arduini

    2 min read6 chapters

    Detailed Narrative

    01

    Innovation and R&D Investment Payoff

    GE HealthCare has invested over $3 billion in R&D since 2022, leading to a new wave of innovation. This is evident in the AVS segment, where AI-powered systems like the redesigned Interventional Cardiology system Allia and refreshed ultrasound portfolio (Vivid Pioneer, Caption AI) are driving faster growth and higher margins. The company expects this trend to continue in 2026 and beyond, with many new AI-enabled products to be showcased at RSNA.

    02

    Strategic Acquisitions and Portfolio Expansion

    The planned acquisition of icometrix will integrate digital tools for detecting and quantifying high-risk side effects in Alzheimer's patients undergoing therapies. This strengthens GEHC's portfolio for the Alzheimer's care pathway, leveraging its D3 strategy (devices, drugs, digital/AI) and aligning with increasing demand for MRI exams and PET amyloid agents.

    03

    Tariff Mitigation Efforts

    The company has actively managed tariff impact🌐s, mitigating approximately 50% of its 2025 gross exposure. Strategic initiatives include sourcing from lower-cost regions, developing second sources, value engineering, site transfers, and price increases. These efforts aim to reduce net tariff impact🌐 in 2026 compared to 2025 and strengthen supply chain resilience.

    04

    Patient Care Solutions Turnaround

    The PCS segment faced challenges in Q3 FY25 due to a product hold, resulting in a 7% organic revenue decline and significant EBIT margin pressure. However, the product hold has been resolved, and shipments have resumed. New PCS leader Jeannette Bankes is focused on accelerating growth, driving variable cost productivity, and optimizing cost structure, with meaningful sequential improvement expected in Q4.

    05

    Flyrcado Launch Strategy

    The launch of Flyrcado, a novel radiopharmaceutical for nuclear cardiology, is progressing slower than initially targeted for 2025 revenue due to a deliberate "slow to go fast" strategy. This approach prioritizes customer experience, ensuring consistent manufacturing yield and smooth integration into customer workflows. Despite the slower initial ramp, the long-term potential remains strong, with a medium-term target of $0.5 billion by 2028 and potential for $1 billion if 25% of the PET myocardial perfusion market converts.

    06

    China Market Dynamics

    While China sales in H2 FY25 are expected to be lower than H1, the company observes improving stimulus and tender activity, with recovery ongoing. Management remains optimistic about China's long-term potential as a large healthcare market, continuously assessing its portfolio for growth, margin, and strategic fit.

    AI-generated summary of the company’s earnings call. Not investment advice.