Yahoo Finance GE HealthCare Technologies Inc (GEHC) Q1 2024 Earnings Call Transcript Highlights: Key ...
Revenue: $4.6 billion, flat organically year-over-year.
Net Income: Adjusted EPS of $0.90, up 6% year-over-year.
Free Cash Flow: $274 million, driven by improved working capital.
Gross Margin: Adjusted gross margin expanded by 120 basis points.
Backlog: Healthy backlog of $18.7 billion.
Book-to-Bill Ratio: Solid total company book-to-bill of 1.03x.
Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Peter, can you set the stage for us in terms of the U.S. portion of the business, the flattish performance in the quarter and how you see it progressing through the year? A: Peter J. Arduini, President and CEO of GE HealthCare Technologies, explained that the flattish performance in the U.S. during Q1 was primarily due to fulfillment delays in Patient Care Solutions (PCS) and challenges in China. He anticipates these issues will be resolved by mid-year, leading to a more positive outlook for the U.S. market across all business segments. Arduini highlighted the introduction of new ultrasound products and improvements in the imaging sector as key factors that will support growth in the U.S. market.
Q: How should we think about backlog within imaging as the year progresses, which are the levers to be pulled? A: Arduini mentioned that GE HealthCare has a solid imaging backlog with a good mix and growth in price and new platforming capabilities. He expects the majority of the impact to be in the second half of the year, with a pickup in broader imaging orders anticipated throughout the remaining quarters. The introduction of new products like the IGS system and new cath lab are expected to contribute to better margins and a positive shift in the market.
Q: Could you speak to the potential benefits of the new Chinese stimulus for your markets through the remainder of the year? A: Arduini discussed the new Chinese stimulus, noting it differs from previous stimuli by providing specific cash grants rather than just low-interest loans, potentially reaching a broader group of institutions. He expects clarity on the stimulus rules in Q2, which should lead to an uptick in orders. The timing of these orders will influence whether sales benefits are realized within the year or extend into 2025.
Q: Given the lower book-to-bill, how confident are you about the full year '24 outlook? A: Arduini expressed strong confidence in achieving the 2024 guidance, citing improving quarterly comparisons, a growing orders funnel, impactful new products, and an improving situation in China. He emphasized that these factors collectively strengthen GE HealthCare's position to meet its targets.
Q: Can you provide any updates on when we might expect FDA approval for Flurpiridaz? A: Arduini updated that the file for Flurpiridaz, a cardiac imaging agent, has been submitted to the FDA. While not assuming any impact within the 2024 guidance, he anticipates this will be more relevant for 2025 and beyond, pending regulatory feedback.
Q: How do you view the trajectory of gross margins, particularly with the remaining TSAs? A: James K. Saccaro, VP & CFO, explained that gross margin expansion in Q1 was driven by pricing and productivity. He highlighted ongoing productivity initiatives and upcoming benefits from new products. Saccaro also noted that exiting TSAs will allow further optimization of the cost structure, primarily impacting SG&A, which is expected to contribute to improved gross margins moving forward.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
