Executive Summary / Key Takeaways

• Strategic Transformation Fuels Growth: GE HealthCare is successfully executing its "precision care" strategy, evolving into a comprehensive healthcare solutions provider by integrating smart devices, drugs, digital, and AI (D3 strategy) to address complex disease states. This approach is evidenced by robust orders growth and significant enterprise deals.
• Innovation Pipeline Delivering Results: Substantial R&D investments are translating into a "new wave of innovation," with high-margin new product introductions across Imaging, AVS, PCS, and PDx segments, including the promising radiopharmaceutical Flyrcado and advanced Photon Counting CT technology.
• Resilient Financial Performance Amid Headwinds: Despite macroeconomic challenges, particularly significant tariff impacts and a slower China market recovery, GE HealthCare delivered solid Q3 2025 organic revenue growth of 4% and raised its full-year adjusted EPS guidance, demonstrating operational agility and effective mitigation strategies.
• Strong Capital Position and Shareholder Returns: The company maintains a healthy liquidity profile with over $4 billion in cash and access to substantial credit facilities, supporting ongoing organic investments, strategic M&A, and a new $1 billion share repurchase program.
• Competitive Edge Through Integration: GE HealthCare differentiates itself by offering integrated, end-to-end solutions and leveraging its strong brand and global service network, positioning it favorably against specialized competitors in a dynamic healthcare technology market.

The Evolution of Precision Care

GE HealthCare Technologies Inc., an independent entity since its spin-off from General Electric (GE) in January 2023, is redefining its role in the global healthcare landscape. The company is actively transforming from a traditional imaging and equipment vendor into a comprehensive healthcare solutions provider, anchored by its "precision care" strategy. This involves a synergistic integration of smart devices, pharmaceutical diagnostics, and cloud-first AI-enabled solutions—a framework the company terms its "D3 strategy." This strategic pivot is crucial in an industry increasingly demanding integrated workflows, enhanced productivity, and improved patient outcomes, especially given the rising global prevalence of chronic diseases and an aging population.

The company's foundational strength lies in its extensive portfolio across four core segments: Imaging, Advanced Visualization Solutions (AVS), Patient Care Solutions (PCS), and Pharmaceutical Diagnostics (PDx). Each segment contributes to a holistic offering, designed to address critical needs across the patient journey. For instance, the Imaging segment provides essential diagnostic capabilities through CT, MR, and X-ray systems, while AVS focuses on ultrasound and interventional solutions. PCS delivers vital patient monitoring and anesthesia products, and PDx supplies critical diagnostic agents and radiopharmaceuticals. This integrated approach allows GE HealthCare to offer a differentiated value proposition, particularly in complex clinical areas like cardiology, oncology, and neurology.

Technological Differentiation and Innovation Driving Future Growth

GE HealthCare's commitment to innovation is a cornerstone of its investment thesis, with over $3 billion invested in R&D since 2022. This investment is now yielding a "new wave of innovation," characterized by differentiated products and solutions designed to accelerate growth and expand margins. The company's D3 strategy is not merely a slogan but an operational blueprint, enabling the development of leadership products that seamlessly integrate across disease states.

In Advanced Visualization Solutions (AVS), for example, GE HealthCare has launched AI-powered systems across its entire segment, seeing strong customer adoption. The redesigned Allia IGS Pulse interventional cardiology system, with its powerful tube, reduced footprint, and onboard AI, is proving ideal for rapidly growing ambulatory surgical centers (ASCs) and office-based labs. The company's ultrasound portfolio has undergone a complete refresh, integrating advanced technologies like Caption AI and upgrading clinical subsystems into common platforms. These advancements have not only driven revenue growth but have also increased the margins of these new products compared to prior models, directly contributing to the segment's strong performance.

The Pharmaceutical Diagnostics (PDx) segment is at the forefront of innovation with Flyrcado, a novel PET myocardial perfusion imaging agent for detecting coronary artery disease. This radiopharmaceutical offers exceptional image quality and half-life benefits, making it a "game-changing innovation for nuclear cardiology." While the 2025 revenue from Flyrcado is expected to be below initial projections due to a deliberate focus on optimizing customer experience and supply chain consistency, management remains highly confident in its long-term potential. The company projects Flyrcado to reach $0.5 billion in revenue by 2028, with a potential to achieve $1 billion annually if 25% of the PET myocardial perfusion market converts to the product. This significant opportunity is supported by CMS pass-through pricing and new global guidelines.

Within the Imaging segment, GE HealthCare is poised to launch its Photon Counting CT, which management describes as a "most unique approach within the marketplace." This technology aims to go beyond improved image quality and lower radiation dose by focusing on "deep silicon" and "spectral imaging." This approach is expected to enable the detection of molecular changes at a cellular level in CT imaging, a capability not widely demonstrated by current products. This could transform how CT is used, providing more data for clinical decisions that may alter therapy outcomes and offer economic benefits to users. The company is also developing a new full-body PET system, which could significantly impact oncology care by changing the amount of dose a patient receives and potentially enabling new approaches to screening and evaluation.

Patient Care Solutions (PCS) is also undergoing a significant refresh, with new products like a completely refreshed anesthesia delivery system, a monitoring platform for non-U.S. markets, and CareIntellect for Perinatal—a cloud-first Software-as-a-Service (SaaS) offering providing real-time insights in labor and delivery. These initiatives are designed to drive faster growth, higher margins, and recurring revenue for the segment. The company's leadership in AI is further underscored by achieving 100 FDA authorizations for AI-enabled medical devices, topping the FDA's list for the fourth consecutive year. These AI integrations are enhancing productivity for customers and fueling GE HealthCare's growth.

Competitive Landscape and Strategic Positioning

GE HealthCare operates in a highly competitive global market, primarily vying with other diversified healthcare technology giants such as Siemens Healthineers (SMMNY), Philips Healthcare (PHG), Medtronic (MDT), and Abbott Laboratories (ABT). Each competitor brings distinct strengths and strategic focuses, shaping the dynamics of the industry.

Siemens Healthineers, a leader in imaging and laboratory diagnostics, often prioritizes specialized, high-tech innovations with advanced AI features. In comparison, GE HealthCare's integrated solutions, particularly its MR and CT systems, aim for greater efficiency in clinical workflows. While Siemens may be perceived as more agile in certain AI-driven diagnostics, GE HealthCare leverages its legacy brand strength and global service network to foster customer loyalty and ensure faster deployment of solutions.

Philips Healthcare emphasizes health technology, including imaging, patient monitoring, and connected care systems, with a strong focus on ultrasound. GE HealthCare's offerings in ultrasound and patient care are designed for versatility in complex diagnostic environments, potentially offering greater efficiency in high-volume settings. GE HealthCare's depth in pharmaceutical diagnostics also provides a unique differentiator, fostering stronger customer loyalty in specialized radiology markets, whereas Philips often excels in user-friendly, point-of-care innovations.

Medtronic is a major player in medical devices and therapies, overlapping with GE HealthCare's Patient Care Solutions. While Medtronic focuses on therapeutic devices, GE HealthCare's patient care solutions, such as anesthesia and monitoring systems, offer integrated solutions that enhance operational workflows in hospitals. GE HealthCare's strength in diagnostic imaging, seamlessly tied to patient care, provides an advantage in areas requiring comprehensive data integration.

Abbott Laboratories, strong in diagnostics and medical devices, particularly excels in rapid diagnostics and point-of-care testing. GE HealthCare, in contrast, offers more advanced imaging-based diagnostics, providing superior performance in complex scenarios like MR imaging. GE HealthCare's depth in pharmaceutical agents also fosters stronger loyalty in radiology markets, while Abbott is known for its agility in bringing new diagnostics to market.

GE HealthCare's competitive advantages, or "moats," include its strong brand recognition, proprietary technology in imaging, and extensive global distribution networks. These factors contribute to enhanced customer loyalty, recurring revenue from service contracts, and pricing power. The company's integrated approach, combining devices, drugs, and digital solutions, allows it to serve as a more holistic partner for healthcare providers, particularly in securing long-term enterprise deals. For example, the 14-year Care Alliance with UC San Diego Health, focused on advancing cancer care, exemplifies GE HealthCare's ability to leverage its broad portfolio and service capabilities to create predictable revenue streams.

However, GE HealthCare faces vulnerabilities, particularly regarding supply chain dependencies and the need to continuously accelerate its pace in cutting-edge AI innovations to match or surpass rivals. The company is proactively addressing supply chain risks through diversification, nearshoring, and reshoring initiatives, which are also designed to mitigate the impact of trade tariffs.

Financial Performance and Operational Resilience

GE HealthCare has demonstrated solid financial performance, particularly in the third quarter of 2025, despite a challenging global macroeconomic environment. Total revenues for the three months ended September 30, 2025, reached $5,143 million, marking a 6% reported increase and a 4% organic growth year-over-year. This growth was broad-based, with product sales up 5% ($174 million) and service sales up 6% ($107 million), driven by strong demand in PDx, Imaging, and AVS. For the nine months ended September 30, 2025, total revenues grew 4% reported and 3% organically to $14,927 million.

Profitability, however, faced headwinds. Operating income for Q3 2025 decreased by $23 million to $653 million, representing a 120 basis point decline as a percentage of total revenues. This was primarily due to a $36 million decrease in gross profit, which saw a 300 basis point reduction as a percentage of total revenues. The cost of products sold increased by 380 basis points as a percentage of sales, largely due to cost inflation, including incremental tariffs, and investments in design follow-through. Similarly, the cost of services sold increased by 160 basis points, impacted by an unfavorable mix and cost inflation. Adjusted EBIT margin for Q3 2025 was 14.8%, down 150 basis points year-over-year, with approximately $95 million (180 basis points) attributed to tariff impacts. Excluding tariffs, adjusted EBIT margin would have expanded by approximately 30 basis points. Net income attributable to GE HealthCare for Q3 2025 was $446 million, a decrease of $24 million year-over-year. For the nine months ended September 30, 2025, net income attributable to GE HealthCare increased by $223 million to $1,495 million, benefiting from higher operating income, lower interest expenses, and a reduced income tax provision.

Segment-wise, PDx was a standout performer in Q3 2025, with revenues growing 20% reported and 10% organically to $749 million, and EBIT increasing 14% to $220 million. AVS also showed strong growth, with revenues up 7% organically to $1,301 million and EBIT increasing 17% to $271 million. Imaging revenues grew 5% organically to $2,349 million, though EBIT declined 16% to $240 million due to tariff pressures. The Patient Care Solutions (PCS) segment faced challenges, with organic revenue declining 7% to $731 million and EBIT decreasing 67% to $27 million, primarily due to a product hold that has since been resolved. New leadership in PCS is focused on accelerating growth and optimizing the cost structure.

Liquidity remains robust, with cash, cash equivalents, and restricted cash totaling $4,027 million as of September 30, 2025. The company also has access to $3,500 million in revolving credit facilities. Total debt increased to $10,282 million, primarily due to new senior unsecured notes issued to refinance upcoming maturities.

The company's free cash flow for the nine months ended September 30, 2025, was $589 million, down from $743 million in the prior year, largely due to increased inventory to meet business demand and higher tariff payments. GE HealthCare's Board authorized a $1 billion share repurchase program in April 2025, with $200 million repurchased during the nine-month period, signaling confidence in its long-term value.

Outlook, Guidance, and Risk Assessment

GE HealthCare's updated full-year 2025 guidance reflects a balanced view of continued strong customer demand and persistent macroeconomic challenges. The company expects organic revenue growth of approximately 3%, with a 50 basis point FX tailwind. Adjusted EBIT margin is projected to be in the range of 15.2% to 15.4%. Adjusted EPS guidance has been raised on the lower end, now expected to be between $4.51 and $4.63 per share. Free cash flow is anticipated to be at least $1.4 billion.

A primary assumption underpinning this outlook is the ongoing impact of tariffs. GE HealthCare estimates a tariff impact of approximately $0.45 per share on adjusted EPS for 2025. The company is actively pursuing mitigation strategies, including shifting manufacturing to "local for local" models, developing dual supply sources, and leveraging trade exemptions. These efforts are expected to result in a "lower net tariff impact in 2026 versus 2025," demonstrating a proactive approach to managing this significant headwind.

The China market remains a key area of focus. Management anticipates a low single-digit revenue decline for the region in 2025, with negative performance in the first half and sequential improvement in the second half. While the recovery has been slower than initially expected, the company remains optimistic about China's long-term potential as one of the largest healthcare markets globally. The broader capital equipment market outside of China is viewed as healthy, driven by an aging installed base in the U.S., robust procedure volumes, and the demand for productivity-enhancing solutions. This is reflected in GE HealthCare's strong orders growth and record backlog of $21.2 billion as of Q3 2025.

Key risks to the investment thesis include the continued volatility of the global trade environment and the potential for new tariffs or trade restrictions. Geopolitical instability, particularly in the Middle East and the ongoing Russia-Ukraine conflict, could also impact supply chains, logistics, and costs. The company is also involved in legal proceedings, such as the lawsuit related to contracts with the Iraqi Ministry of Health, which could have an unpredictable impact. However, GE HealthCare's diversified global supply chain and proactive mitigation plans are designed to enhance resilience against these external pressures.

Conclusion

GE HealthCare Technologies Inc. is executing a compelling transformation, leveraging its "precision care" strategy and D3 framework to drive sustainable growth and enhance shareholder value. The company's significant R&D investments are translating into a robust pipeline of innovative, high-margin products, particularly in advanced imaging and pharmaceutical diagnostics, which are poised to redefine patient care and operational efficiency. Despite facing substantial tariff headwinds and a nuanced recovery in the China market, GE HealthCare's operational agility, strong commercial execution, and proactive mitigation strategies have enabled it to deliver solid financial results and maintain a confident outlook for its medium-term targets.

The company's integrated solutions, strong brand, and expanding enterprise partnerships provide a durable competitive advantage in a dynamic healthcare technology landscape. As GE HealthCare continues to roll out its next-generation technologies, such as Photon Counting CT and Flyrcado, and optimizes its global supply chain, it is well-positioned to capitalize on enduring industry trends like an aging population, increasing procedure volumes, and the growing demand for AI-enabled solutions. Investors should recognize GE HealthCare's strategic clarity, technological leadership, and disciplined capital allocation as key drivers for long-term value creation, even as it navigates the complexities of the global economic and geopolitical environment.