GE HealthCare Shares Drop After Missing First-Quarter Estimates
GE HealthCare shares took a hit in early trading on Tuesday after the medical device manufacturer reported weaker-than-expected results for the first quarter. The company’s revenue and net income fell short of analysts’ estimates, with sales in key segments like Imaging, Ultrasound, and Patient Care Solutions declining from the previous year.
Revenue and Earnings Fall Below Expectations
In the first quarter, GE HealthCare reported revenue of $4.65 billion, down from $4.71 billion in the same period last year. This figure was also below the $4.81 billion that analysts had anticipated. Sales in the Imaging segment, which includes products like MRI machines, dropped by 1%. The Ultrasound and Patient Care Solutions segments saw even steeper declines, with sales falling by 4% year-over-year. On a positive note, the Pharmaceutical Diagnostics segment experienced a 7% growth compared to the previous year, although it represented a smaller portion of GE HealthCare’s overall sales.
Net income for the quarter rose slightly to $374 million, or 81 cents per share, up from $372 million, or 41 cents per share, in the same period last year. However, this increase was still below analyst expectations of $391.52 million, or 88 cents per share.
Increased R&D Spending and Future Investments
GE HealthCare also noted a rise in research and development spending, which totaled $324 million in the first quarter compared to $270 million in the previous year. The company highlighted its investments in technologies like artificial intelligence (AI) as potential drivers of future growth and innovation, aiming to deliver enhanced clinical and productivity solutions in the years ahead.
Outlook for the Rest of the Year
Despite the disappointing first-quarter results, GE HealthCare reaffirmed its full-year guidance. The company expects revenue to grow by approximately 4% and adjusted earnings per share (EPS) to fall within the range of $4.20 to $4.35. This forecast represents an improvement over the $3.93 reported in 2023.
GE HealthCare CEO Peter Arduini expressed confidence in the company’s ability to achieve its goals for the year, emphasizing a focus on margin expansion and ongoing investments in innovation to meet evolving customer and patient needs. He anticipates that business growth will be weighted more towards the second half of 2024, aligning with previous projections.
Recent Corporate Restructuring
While GE HealthCare was spun off from General Electric last year, the broader transition of General Electric into three distinct standalone companies was only recently completed. The energy and aircraft technology divisions of the former GE now operate as GE Vernova and GE Aerospace, respectively. Both Vernova and Aerospace reported their earnings last week, with Aerospace’s stock rising post-report while Vernova’s stock declined following a loss.
Despite the drop in share price after the first-quarter results, GE HealthCare shares have seen an overall gain of close to 5% since the beginning of 2024. Investors will be closely monitoring the company’s performance in the coming quarters to assess its ability to deliver on its full-year guidance and drive future growth.
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