GE HealthCare Stock Tumbles After Earnings Miss

GE HealthCare (GEHC) shares tumbled over 9% in early trading Tuesday after the medical device manufacturer reported weaker-than-expected results for the first quarter as sales in its Imaging, Ultrasound, and Patient Care Solutions segments fell. 

Revenue, Earnings Miss Analysts’ Estimates

GE HealthCare posted first-quarter revenue of $4.65 billion, down from the $4.71 billion it reported a year earlier, and below the $4.81 billion analysts expected, according to estimates compiled by Visible Alpha. Sales fell 1% in GE HealthCare’s Imaging segment, its largest which includes the production of technology like MRI machines. Sales in its Ultrasound and Patient Care Solutions segments dropped 4% year-over-year. The company’s Pharmaceutical Diagnostics segment grew 7% year-over-year, though it accounted for a smaller share of GE HealthCare’s sales.

GE HealthCare’s net income rose slightly to $374 million or 81 cents per share, up from $372 million or 41 cents per share in the year-ago period, but that also came short of analyst estimates of $391.52 million or 88 cents per share.

R&D Spending Rises

The company also reported research and development spending rose to $324 million, compared to the year-ago quarter when it spent $270 million. In the company’s fourth quarter presentation, GE HealthCare said its investments into technology like artificial intelligence (AI) could put the company in a good position to “deliver clinical and productivity enhancements” in the coming years.

Growth Could Be Weighted Toward Second Half

Despite lackluster first-quarter results, the company affirmed its full-year guidance, projecting revenue growth of about 4% and adjusted earnings per share (EPS) of between $4.20 and $4.35, compared to the $3.93 the company reported in 2023.

“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,” GE HealthCare CEO Peter Arduini said. “We expect to see business growth weighted toward the second half of 2024 consistent with our previous comments, and we remain on track to deliver our guidance for the year.”

Though GE HealthCare was spun off from General Electric last year, the transition of General Electric into three separate, standalone companies was completed just earlier this month, with the former GE’s energy and aircraft technology divisions becoming GE Vernova (GEV) and GE Aerospace (GE), respectively. GE Vernova and Aerospace reported earnings last week, with Aerospace’s stock rising following its report and Vernova’s falling after posting a loss.

GE HealthCare shares were 9.1% lower at $80.99 as of about 9:50 a.m. ET Tuesday following the release. Still, the stock has gained close to 5% since the start of 2024.