GE Healthcare's stock on track for biggest gain since spinoff from GE after earnings beat

By Ciara Linnane

Pharmaceutical diagnostics revenue rose 25% in the latest quarter

GE HealthCare Technologies Inc.'s stock rose 13% Tuesday to lead S&P 500 gainers, after the company posted better-than-expected profit and revenue for the fourth quarter, offsetting soft profit guidance for 2024.

It was the biggest one-day percentage gain for GE HealthCare (GEHC), which was spun out of General Electric Co. (GE) in January of 2023 and houses its medical device business. The previous record was a gain of 8.2% on Jan. 11 of 2023.

The company posted net income of $403 million, or 88 cents a share, for the quarter, down from $554 million, or $1.21 a share, in the year-earlier period.

Adjusted per-share earnings came to $1.18, ahead of the $1.07 FactSet consensus.

Revenue rose 5% to $5.2 billion, also ahead of the $5.1 billion FactSet consensus.

Chief Executive Peter Arduini said the company invested more than $1 billion in R&D in its first year of operation as a stand-alone company and made strategic acquisitions to bolster growth, while also paying down $1 billion in debt.

"As a result of our investments, we estimate that we've gained global market share in equipment in 2023. And once again, we topped the FDA's list of AI-enabled device authorizations with 58, more than any other medtech company. " Arduini told analysts on the company's earnings call, according to a FactSet transcript.

By segment, imaging revenue rose 4% to $2.8 billion, while ultrasound revenue fell 1% to $944 million.

Patient care solutions revenue rose 5% to $827 million, and pharmaceutical diagnostics revenue rose 25% to $591 million.

The company exited the quarter with a backlog of $19.1 billion, up $700 million from the third quarter.

The company is now expecting 2024 adjusted EPS of $4.20 to $4.35, while FactSet is expecting $5.74.

It expects organic revenue growth, which excludes the impact of foreign exchange and acquisitions, of about 4%. Free cash flow is expected to total $1.8 billion, while FactSet is expecting $2.2 billion.

In other news, GE HealthCare is participating in a project to pioneer an AI-screening platform for early detection of Alzheimer's disease. It also announced new data validating AI models for predicting patient response to immunotherapies.

The stock has gained 2% in the last 12 months, while the S&P 500 has gained 20%.

-Ciara Linnane

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02-06-24 1413ET

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