GE HealthCare shares tumble 7% on revenue miss

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CHICAGO - GE HealthCare (NASDAQ: NASDAQ:GEHC), a prominent player in the precision care industry, reported a slight decline in revenue for the first quarter of 2024, which fell short of Wall Street expectations.

The company announced Q1 revenues of $4.65 billion, a 1% decrease compared to the same period last year and below the consensus estimate of $4.89 billion. Adjusted earnings per share (EPS) for the quarter were $0.90, just a cent lower than the analyst estimate of $0.91.

Following the release, GE HealthCare's stock price dropped by 6.5%, indicating a negative response from the market due to the revenue shortfall.

Despite the revenue miss, the company saw a marginal increase in net income, reporting $374 million compared to $372 million in the prior year. Adjusted earnings before interest and taxes (EBIT) margin improved from 14.1% to 14.7%, reflecting gains from productivity and pricing strategies.

Diluted EPS rose significantly to $0.81 from $0.41 in the previous year, primarily due to a noncontrolling interest redemption of preferred stock in the prior year. However, cash flow from operating activities decreased to $419 million from $468 million, and free cash flow also saw a decline, coming in at $274 million compared to $325 million in the previous year.

GE HealthCare's President and CEO Peter Arduini expressed optimism, stating, "We made good progress against 2024 priorities in the first quarter. We delivered margin expansion, while continuing to invest in innovation to solve the evolving needs of customers and patients."

He highlighted the company's strong backlog, orders growth, and positive book-to-bill ratio, which stood at 1.03 times. The company also completed the acquisition of MIM Software, aiming to bolster its precision care strategy.

Looking ahead, GE HealthCare reaffirmed its full-year 2024 guidance, projecting an adjusted EPS range of $4.20 to $4.35. This guidance aligns closely with the analyst consensus of $4.30. The company anticipates business growth to be weighted toward the second half of the year, consistent with previous comments, and remains on track to meet its annual targets.

The company's commitment to research and development (R&D) was evident in the quarter, with Arduini noting double-digit growth in R&D investment. GE HealthCare secured FDA clearances, entered strategic research partnerships, and announced long-term collaborations to supply innovative technology to customers, underscoring its dedication to driving innovation and growth.

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