GE HealthCare at Bank of America 2025: Strategic Growth Amid Tariff Challenges

On Tuesday, 13 May 2025, GE HealthCare Technologies Inc. (NASDAQ:GEHC) participated in the Bank of America 2025 Healthcare Conference. The company highlighted its robust order growth and strategic initiatives for 2025, while acknowledging challenges posed by tariffs and the Chinese market. Executives expressed optimism about long-term growth, driven by innovation and digital initiatives.

Key Takeaways

• GE HealthCare reported 4% organic revenue growth and record 10% organic order growth in Q1 2025.
• Tariff reductions between the U.S. and China could provide a $0.40 tailwind, though current guidance remains unchanged.
• The company anticipates a mid-single-digit revenue decline in China for the first half of 2025, with improvements expected later in the year.
• The launch of Vocado is underway, with a 2025 revenue target of $30 million, aiming for over $500 million in the future.
• GE HealthCare reiterated its full-year revenue growth guidance of 2% to 3%.

Financial Results

• The company experienced a $0.85 impact from tariffs, with $0.65 related to U.S.-China trade.
• A 100 basis point reduction in tariffs could lead to a $0.40 improvement in guidance.
• GE HealthCare maintained its full-year revenue growth guidance of 2% to 3%.
• Q1 2025 saw 4% organic revenue growth and record 10% organic order growth.
• The U.S. and European markets exhibited strong performance, while China faced a low single-digit decline.

Operational Updates

• Strong order growth in the U.S. and Europe, particularly in imaging and Advanced Visualization Solutions (AVS).
• Despite a challenging start, China is expected to recover to normal growth levels.
• The Vocado launch focuses on CMS reimbursement, local manufacturing, and commercial insurance.

Future Outlook

• GE HealthCare expects Q2 2025 revenue growth between 1% and 2%, with stronger performance anticipated in the second half of the year.
• Long-term revenue growth is targeted at mid-single digits through 2028.
• The company is optimistic about China’s performance improving soon.

Q&A Highlights

• The company is closely monitoring tariff impacts and exploring mitigating actions.
• Hospital capital expenditure (CapEx) remains strong in the U.S., with positive signs for 2025 and 2026.
• GE HealthCare aims to transition some of its business towards more recurring revenue models.

In conclusion, GE HealthCare remains confident in its growth strategy despite current challenges. Readers are encouraged to refer to the full transcript for more detailed insights.

Full transcript - Bank of America 2025 Healthcare Conference:

Craig Bijou, Med Tech Analyst, BofA: Good morning, everyone. Welcome to the BofA Healthcare Conference. I’m Craig Bijou, one of the med tech analysts here. And it’s a pleasure to have GE Healthcare. And from the company with us is Jay Sicaro, CFO, and Carolyn Borders, who’s Chief Investor Relations Officer.

So, Jay and Carolyn, thank you both.

Jay Sicaro, CFO, GE Healthcare: Great. Thank you for the invitation to the conference. As always, it’s nice to be here again. And it’s nice to see everybody in attendance. Thanks for your interest in our company and support.

Craig Bijou, Med Tech Analyst, BofA: All right, Jay. So let’s start with tariffs. And, obviously, over the weekend, we heard about the reduction of tariffs both, you know, for China to US, US to China. You have been one of the companies that has been most affected by China tariffs specifically, at least within medtech. I also think you guys did a very good job of laying out your exposure and some of the mitigating actions that you’re taking and what the impact that would have.

I guess maybe just start with your reaction to the lowering of the tariffs and then we’ll kind of get into a little bit more detail there.

Jay Sicaro, CFO, GE Healthcare: Sure. I think, from our perspective, this is a great first step in terms of establishing a nice trading relationship with China based on the terms and the discussions that have started. I think, from our perspective, as you mentioned, we’re very impacted by global trade. And in particular, we’re impacted by this U. S.

And China trade back and forth. We highlighted in our earnings material roughly $0.85 of impact from tariffs. Of that, $0.65 relates to U. S. And China.

And so we were heartened to see the news. And hopefully, you know, there’s a temporary pause on a portion of the tariffs. So hopefully, the trade negotiations continue.

Craig Bijou, Med Tech Analyst, BofA: Got it. And you did highlight on on the call, maybe or I guess you had a good guess that you you know, you said if you’ve if tariffs came down by a hundred basis or a hundred points a % on both sides, it would be a 40¢ impact, I I believe is is the number that you use. So maybe just help us think about with the temporary tariffs, like, that still the right way to think about the impact from the reduction of tariffs? Are there some other factors, and this is, I guess, specifically for ’25, that we should be thinking about?

Jay Sicaro, CFO, GE Healthcare: Sure. I think that gives you a good rule of thumb. What we said on the earnings call is, to the extent that there is an improvement in the tariff rate by 100 basis points reciprocally each way, the benefit of that and that occurred on May 1, that would be about a $0.40 tailwind to the guidance that we shared. So good news is the final amount is similar to that, perhaps is a little bit more in total. And there’s a little bit of exposure in terms of an element that might revert in August.

So I think on balance, it’s a good planning assumption for now.

Craig Bijou, Med Tech Analyst, BofA: Got it. And then just in terms of what you guys are going to do, I mean, you’re still keeping your guidance irrespective of of the lowering of the tariffs and I mean, no change that you’re you’re making today.

Jay Sicaro, CFO, GE Healthcare: Yeah. We’re not we’re not adjusting our guidance today. Why? Because we gave you the sensitivity necessary to kind of think about the implications of the changing trade dynamic with China. And secondly, like who knows what’s going to happen in the coming weeks in terms of new deals, in terms of different facets and how things go.

So we’ll take the opportunity in our earnings call in July to refresh guidance. And I’m hopeful that we’ll have a trade deal with China that makes a lot of sense and continuation of what we’ve discussed here. And so it will move forward along the lines of what we’ve laid out already.

Craig Bijou, Med Tech Analyst, BofA: And then I do think a lot of investors want to understand what that means for ’26. You also gave a lot of color on the call. Tariffs in ’26, you expected the impact to be less than what it was in ’25. And that was through additional mitigating steps that you were gonna take. So how how are you thinking now with the potential for lower tariffs about those mitigating steps and how should we be thinking about what the impact will be in ’26?

Jay Sicaro, CFO, GE Healthcare: Sure. For for those who are not aware, we previously said we expect the 2026 impact to be zero eight five dollars or below. And so we had basically done a lot of work based on the tariff structure that existed at the time to walk through a series of planning, supply chain initiatives that would allow us to lower the overall impact in ’twenty six. Because as you look at it, in 2025, the fourth quarter is the most prominent impact that we have, or it was. I think it still may be.

But the fourth quarter was the most prominent impact that we had. And so were you to simply extrapolate, you’d come up with a number much larger than $0.85 Our teams got hard to work in terms of identifying opportunities to mitigate dual sourcing of supply chain, thinking about more local for local manufacturing, thinking about simplification of bonded logistics routes, etcetera, etcetera. And so a lot of work went into it. And what we were able to say is, look, if the tariffs stay where they’re at, we feel good about the 2026 number. It’s clear based on what we’ve heard and were these changes to remain in effect, we would feel even better.

In terms of specific amounts, part of this will depend on the final nature of the deals because some of the things that you might be willing and interested in doing in a 150% tariff scenario may be different in a 50% scenario. You may have a different threshold. And so I’m excited about the deal that we have in place thus far and the opportunity that we have. And so we’ll work very carefully and we’ll have some updated perspective on this when we share guidance in July. Got it.

Craig Bijou, Med Tech Analyst, BofA: And then maybe one more on tariffs. I believe on the Q1 call you said PDX, any impact to PDX was not included in the tariff estimates that that you made. So wanted to, you know, make sure that that that was, that was true and and understand, you know, your position on PDX. Then even with the new executive order on pharma that’s out, what potential impact could that have on the ultimate tariff impact for you guys?

Jay Sicaro, CFO, GE Healthcare: Yeah. I think there’s a key question which is at the center of this and we don’t have clarity on the answer to it yet. Is PDX, the pharmaceutical diagnostics included as part of the Section two thirty two investigation? What is it in relation to the most recent executive order? And we don’t exactly have clarity on whether PDX is involved or treated as a pharmaceutical with respect to those definitions.

Our contention and belief is these are diagnostic products using conjunction with imaging equipment to kind of identify better characterize elements in the human body. And so it doesn’t feel like it’s a pharmaceutical product. So that’s kind of what we’re working through right now and really looking to ensure that we have the right support to make that contention and that the administration sees it that way as well. But it’s a very different thing. And so we’ll have to see how this plays out.

I don’t have a clear answer at this point yet, but we’re working through that.

Craig Bijou, Med Tech Analyst, BofA: Got it. Maybe shifting away from tariffs and just a couple weeks ago, you presented pretty strong Q1 results, 4% revenue, organic revenue growth, record organic order growth. So maybe just, you know, and it was well ahead of your guidance. So maybe just talk about kind of what you saw in the quarter, what went better than what you were expecting and some of the drivers of the particularly strong order growth.

Jay Sicaro, CFO, GE Healthcare: Yeah. We were really pleased with the order growth in the first quarter. ’10 percent was a record for us. It was on the back of a fourth quarter, which was pretty good. I think we had 6% order growth in the fourth quarter.

So stacking two quarters in a row of very robust growth. Over the last perhaps year, we’ve seen a robust environment in The US. Imaging First of all, radiology and imaging is an area in many hospitals which is constrained. And so there’s real interest in expanding or getting the latest equipment because it’s revenue generating. It meets an acute need in the hospital.

So there’s real interest in equipment, and that played out in the first quarter. We saw very robust sales, orders for imaging, for our AVS business, lots of broad based interest. The second thing is, from a European standpoint, we did see a really nice performance. In the financial statements, you would see that the European business grew 0%. There was actually a bit of growth on a constant currency basis.

But what was interesting to me is we saw really good performance from an order standpoint, not to the level of The U. S. By any stretch, but solid order growth coming from our European business, which we had not seen in a while. There had been some overhangs in Europe as it related to stimulus in the 2021, ’twenty two, even a little bit of ’twenty three timeframe that was impacting performance. And we also did a reorganization about a year ago centralizing Europe under an international leader.

Well, that commercial execution orientation has started to play real dividends. We’re really pleased with the Nuffield deal, which we announced, but also lots of collaborations with governments and ministries of health and healthcare institutions across Europe. So we’re seeing good momentum there. China, we’ve discussed, it was a low single digit decline. Largely speaking, what we anticipated.

We’re not anticipating that market. We’re going to see some recovery, a little bit of better performance in the second half off of down mid single in the first half, but no real changes to our perspective on that market. So it really came down to robust performance in US and Europe and robust performance in imaging and AVS within that.

Craig Bijou, Med Tech Analyst, BofA: Got it. I do want to ask about China. I want to ask about the guidance. But just given some of your comments on the strength of order growth in The US and and Europe, maybe just talk about the broader hospital CapEx environment and kinda what you’re seeing there. I know you do a lot of surveys.

It seems to be pretty, you know, still robust. There doesn’t seem to be a ton of consternation about recession or or other pressures that may limit buying. But just wanted to get your perspective. What are you hearing from your customers?

Jay Sicaro, CFO, GE Healthcare: I should ask you because you all do a great quarterly survey that we read, by the way. We do a quarterly survey of our top customers. I think it corroborated a lot of what you saw as well, which is the environment is not bad. I know that there’s a lot of uncertainty around what’s going to happen with new budgets and what implications does that have for ’twenty five and ’twenty six? How does hospital profitability look in that new world?

A lot of questions about that. But at the same time, we’ve seen thus far this year, it’s been solid. Certainly good order momentum in the first quarter, and that’s continued through April. So it’s been a nice start to the year, and I think we’ll watch it very carefully. We survey this every quarter, we look at not only the aggregate but the rate of change.

I know you do the same thing. It’ll be interesting to see how this shakes out, but thus far, we have not seen a dramatic negative impact as a result of concerns. And on the contrary, the environment’s been robust.

Carolyn Borders, Chief Investor Relations Officer, GE Healthcare: On global procedure growth too. We’re continuing to see that remain very healthy. That bodes well for our pharmaceutical diagnostic business. So it’s both CapEx and procedures.

Craig Bijou, Med Tech Analyst, BofA: Maybe a quick follow-up on that. The survey or your customers, how how focused are they on 26? Because I think that’s always something that comes up within our even our CapEx survey when we think about it. We think about, you know, the near term, you can say they’re you know, the budgets are in place. They’re gonna be buying.

But what’s the perspective thought on ’26? And is there any so are they actually thinking out to ’26 when you talk to them?

Jay Sicaro, CFO, GE Healthcare: A little bit. I do think the crystal ball gets a little cloudier as you forecast out a year or two years, And I think it’s more reliable. When we ask the question, Hey, what are your plans for the remaining nine months of the year? There’s pretty good line of sight for what expectations a hospital has in terms of deployment of capital. As you look forward a year or two, it’s a little bit of a softer call.

And so I would say that we put more reliability in the short term questions. We do ask some questions longer term, but I think the reliability is much more in the short term. I

Craig Bijou, Med Tech Analyst, BofA: want to talk about guidance. So we talked about the strong Q1 guidance for the full year. On the revenue side, you kept you reiterated and you gave some q two guidance of one to 2%, which is obviously a step down from q one. So maybe just talk about how we should be thinking about the rest of the year and what are some of the factors that despite the 4% growth that was actually above in Q1 above your guidance that you reiterated? So are there any other concerns that we should be thinking about or maybe just kind of walk us through how we should be thinking about the cadence of growth throughout the year?

Jay Sicaro, CFO, GE Healthcare: Sure. I think for us, the way we put together the revenue forecast, you have roughly half of your business which is recurring revenue. And not exactly recurring but behaves like recurring revenue. What I mean by that is our PDX business, very volume based, kind of moves along in a fairly linear manner. Our service business, too, another business that moves along very linearly.

That’s about half your business. The remaining piece of your business is equipment related. And in the case of the equipment related business, we look at a number of things as we put together the revenue forecast. We look at the order funnel that we have, and then we we look at historic conversion rates of that order funnel to orders. That gives us orders that we need for the particular forecast period.

We also look at the backlog. You’ll recall we have a record backlog in place. We’re so proud of the tremendous work that we were able to do to secure this great backlog. But then what happens with the backlog is every piece of equipment in that backlog gets a date. Most many of the dates are this year, some are next year, but you have hard dates on all of that.

And that allows us with a high degree of fidelity to give a revenue forecast. By this point in the year, you’re likely over 80% secured. And from our standpoint, as we put together this forecast and as we looked at the Q1 result, the words we used on the call were increasing confidence in our ability to deliver the year. We felt really good about all of the elements, the ingredients that I just laid out for you, order funnel, anticipated conversion to orders, plus your secured backlog, that whole mix gave us a high level of confidence in what we’re going to be able to do. We didn’t change guidance, but we feel good about the 2% to 3%.

I think we’ll hopefully continue to deliver on that amidst a very volatile macro backdrop, but so far so good. Now, as it relates to the second quarter, again, this comes down to very specifically when are you delivering things. Part of the reason why Q2 might be below Q1 or Q3 really simply comes down to when are things slotted for delivery. A lot of those orders that we had in the first quarter come in the second half of the year, which is fine with me. Right?

As long as it’s penciled in and secured and we have a commitment from our customer, whether it comes in Q2 or the second half, it’s not really an issue for us. So we have a lot of that coming in the second half of the year. I think it sets us up very well. We also have some coming in 2026, which also I don’t mind. From my perspective, starting to secure 2026 revenues allows our business to behave perhaps less like a pure capital business and more like a planned capital or even recurring business.

What I mean by that is, you know, if there sales that are committed in 2026 attached to new facility builds, well, that’s great. Like, we know it now, and it goes into that secured calculation that I described earlier.

Craig Bijou, Med Tech Analyst, BofA: Maybe if I just push you a little bit on, you know, you talked about the 6% organic growth in q four, ten % organic growth in q one. Obviously, there’s some correlation to order growth and then subsequent quarters, whether it’s two, three, however many down the road, you’re gonna realize the revenue on those orders. I guess, why shouldn’t we expect something closer to the six to 10? I’m not suggesting that it’s going to be that high, but even kind of getting back to your mid single digit target that you have.

Jay Sicaro, CFO, GE Healthcare: Well, remember, we talked about this year being this 2% to 3%, and a lot of that came down to performance in China. As China restores to a more normal level of growth, it’s a lot easier to get to our mid single digit target, and we’re expecting that in the very near future to start to make that turn. We’ll talk ’26, ’20 ’7. We talked about mid single digits from now until ’28, and this year is not mid single digits. That implies the rest of the years really start to become that.

First of all, your comment is right on. For me, it was really important to see that acceleration in order momentum. It’s outstanding and it’s supportive of the long term thesis. We said mid single. To get there, you need good order performance.

The only thing I would say is before the 6%, I think we were 1% or two in Q3. You have to look at this over a multiple period of quarters. And then Q2, we’re not going to grow orders 10 again. That was a great performance, don’t get me wrong, but it was a little bit outsized relative to our expectation. So Q2 will be hopefully a good order growth, but not along the lines of what you’ve seen.

And so this is just about building consistent momentum. And, Craig, here’s the interesting thing. What is starting to happen is a lot of the new products that we’ve launched. You know, we talk about this vitality index of 50%, which is really quite high, products launched in the last three years. What you see is the benefits of that.

That is triggering, to some extent, people to decide to replace and to decide to purchase our equipment. I think all of these things are starting to come together in a very good way, and I’m optimistic about where we can take this in the coming years based on that commitment to innovation that we had, based on the commercial excellence work that we’ve talked extensively about, the enterprise partnerships, and then based also on the continued work we’re doing in digital. All of those things wrapped together create a very compelling story and I think support the long term story from a financial standpoint. Got it.

Carolyn Borders, Chief Investor Relations Officer, GE Healthcare: And I think it’s worth noting too for investors that orders isn’t the only metric to look at because sometimes that can be lumpy. So we like to also give you the backlog and book to bill. Take the three of those together and hopefully paint a picture of how we expect to get to our revenue.

Craig Bijou, Med Tech Analyst, BofA: Got it. Thank you. That’s that’s helpful. Let’s let’s move on to China. We’ve been talking about China stimulus for over a year now and some of the uncertainty there.

So maybe just kind of level set where where we are within the stimulus, the progress that’s being made today.

Jay Sicaro, CFO, GE Healthcare: We’re starting to see progress. I think we were surprised by the pace at which the recovery was occurring last year. And we ultimately had to reduce guidance in the second or third quarter as a result of what was going on in China. But as we got through it, we really decomposed the stimulus process into a multi step, maybe five step process of initiation all the way through successful order to sale. And I think we got our arms around it reasonably well.

What I would say at this point is things are progressing, broadly speaking, in line with what we expected to see. In the first quarter, we declined 1%. As reported, there was some negative FX mix in there. So overall, it was a decent quarter, kind of where we expected it to be. As we go to the second quarter, it won’t quite be as good as the first quarter based on and this from a revenue standpoint, And this comes back to this question about when your backlog is getting delivered.

And as we look at the second quarter, I think we’ll see a decline more than the first. So on balance, in the first half of the year, we’re going be mid single decline. And then as we look out into the second half of the year, there are a few things that we take comfort in. One is the backlog and one is scheduled. Second is some of this stimulus starting to pay off even in the second quarter into the third quarter that starts to benefit the second half and beyond.

So we put these things together and we feel okay about how the second half looks. I would also say we feel good about what we’ve been able to do from a competitive standpoint in the market. As we’ve looked across the landscape, our performance was not bad compared to others in the market. I think that was a testament to all of the hard work and execution focus from our team in China.

Craig Bijou, Med Tech Analyst, BofA: Right. Guess in China specifically, when you talk about starting to see some of the stimulus pay off, is that orders or revenue growth in the second half?

Jay Sicaro, CFO, GE Healthcare: No. For us, we’ll start to see a better revenue profile in the second half in terms of growth rates versus the first. We don’t really give order guidance by country. We don’t really report order by country. We did it a couple of times last year when it was just so important to the story and such a beneficial piece of information for our investors.

But the problem with giving order growth by country is it’s inherently lumpy. When you’re talking about even China is a big country, sure, but in the grand scheme of the entire company, it’s relatively small. And so when you start talking about order growth and things of that nature, it can move around a lot in a given month or quarter. I guess

Craig Bijou, Med Tech Analyst, BofA: the question is just the potential for stimulus benefit in the second half, which it sounds like there’s some, versus what it could look like in ’twenty six when it really starts flowing? Yeah. We’re hopeful that once we’re through ’25, you start

Jay Sicaro, CFO, GE Healthcare: to see a more normal China. Here’s the interesting thing about that market. It’s been challenging now for 06/08 I mean, it’s been challenging for quite some time in in that market. Actually, since since the February or yeah. Yeah.

Middle of twenty three when when anti corruption was initially announced. So we’ve had challenges for some time. But the interesting thing is people aren’t purchasing. Therefore, every day that passes, the installed base gets one day older. The desire to purchase gets one day more.

And so we’re starting to see that pent up demand. So ignoring stimulus and ignoring all of these other factors, the fact of the matter is equipment’s aging. And so that starts to represent an opportunity for us in and of itself in support of our what we hope for this business over the midterm is mid single digit growth. We’re not expecting high single digit, but mid single digit growth in the coming years.

Craig Bijou, Med Tech Analyst, BofA: Got it. I think we have a few minutes left. Let’s just touch on Vocado. And obviously, recently launched, I think the general view of let’s say my view and then maybe the general view of investors is that the expectation for the 30,000,000 might be a little bit conservative in the first year. Maybe just talk about how that launch is going and some of the factors that get you to that 30,000,000 for ’25.

Jay Sicaro, CFO, GE Healthcare: First of all, we certainly hope you’re right and we are working so hard to make you right as well, to prove you right. From our standpoint, it’s all about successfully setting up all of the parameters to successfully launch and accelerate growth. It starts with previously getting the CMS reimbursement in the right corridor. We have that in place. Once you have that, you have to get your local manufacturing networks in place.

We have 13 local providers who can deliver real time. And by the end of the year, we’ll be at 26, and we’ll have roughly 90% coverage of the market by the end of the year from a supply standpoint. You have to have commercial carrier reinsurance in place another important step, another area where we’re making really good progress. And then those are all key ingredients. Then you have to sell it.

And so there are a few hundred relevant centers that do most of the scanning and imaging in The United States. And so it starts with having the right segmentation and then putting the right sales plan in place with respect to each of them so that we can convert. And then hypercare. Once you have them on, we have to make sure it’s a great experience. Then once you have the momentum in place, you can build from there.

So for me, it’s all of these building blocks. We have a very rigorous tracking mechanism that I actually get to see every week with the progress that we’re making. Have we hired the reps? Have we onboarded the manufacturers? Where are we with commercial carrier insurance?

How many doses? How many centers? How many centers ramping the ramp rate? All of that is in weekly tracker that Pete and I look at along with the rest of the team. And it’s that kind of execution.

This is not a simple launch. Right? Because there you you heard me describe all the different elements that have to be in place. So far, it’s it’s going well. I’m pleased with each of the different ingredients that we have and that we’ve been able to put forth.

What I’m hopeful of for me, the most important number is, what’s the December sales? Because this is a number that don’t it’s not like a lot of things, there’s year end buying. This is not that because it expires. So to the extent that we can get this ramped correctly and certainly I hope we beat the 30,000,000 And if we have a robust December number, all the work we’re doing is to line up that number correctly so that as we move into ’26, there’s a very strong jumping off point. And then at that point, we’ve said hopefully in excess of $500,000,000.

That’s our expectation, you know, and hopefully it’s well in excess of that. Let’s see.

Craig Bijou, Med Tech Analyst, BofA: Great. I think with that, we’re out of time. So Jay, Carolyn, thank you very much. Great. Thank you so much.

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