GE HealthCare Technologies Inc. (GEHC) Q1 2025 Earnings Summary

Executive Summary

Q1 2025 delivered solid top-line and profit growth: revenues $4.78B (+3% YoY; +4% organic), adjusted EBIT margin 15.0% (+30bps YoY), and adjusted EPS $1.01 (+12% YoY). Book-to-bill was 1.09x with record +10% organic orders; backlog reached $20.6B .
Results were above Street: GEHC beat consensus on EPS ($1.01 vs $0.91), revenue ($4.78B vs $4.66B), and EBITDA ($842M vs $794M). Management raised operational confidence but cut FY25 profit and cash guidance on tariffs (approx. $0.85 EPS headwind) .
Guidance reset: FY25 adjusted EBIT margin to 14.2–14.4% (from 16.7–16.8%), adjusted EPS to $3.90–$4.10 (from $4.61–$4.75), FCF to ≥$1.2B (from ≥$1.75B); organic revenue growth maintained at 2–3% .
Strategic catalysts: launch of Flyrcado PET radiotracer with CMS pass-through, completion of Nihon Medi-Physics acquisition (radiopharma scale), and a newly authorized $1B share repurchase program .

What Went Well and What Went Wrong

What Went Well

Strong demand and orders: organic orders +10% YoY; book-to-bill 1.09x; backlog $20.6B, underpinned by U.S. strength and enterprise wins (e.g., St. Luke’s, Sutter Health) .
Segment performance: PDx revenue +6% (+8% organic) and EBIT margin 32.4%; Imaging organic revenue +5% with margin +130bps YoY; AVS organic revenue +3% with margin +10bps YoY .
Strategic innovation: Flyrcado U.S. launch with CMS pass-through; Revolution Vibe CT; continued pipeline progress across Photon Counting CT and total-body PET; management: “record double-digit orders growth…strength in the U.S.” .

What Went Wrong

Tariff-driven guidance cuts: FY25 adjusted EBIT margin reduced ~230bps vs prior guide; adjusted EPS lowered by ~$0.71–$0.65; FCF lowered by ~$0.55B; management cites ~$475M adjusted EBIT headwind and ~$0.85 EPS impact from tariffs .
PCS margin compression: PCS EBIT margin fell 450bps YoY to 6.4% on investments, tariff impact, and mix; focus on higher-margin launches and supplier consolidation to improve .
Cash flow timing: FCF of $98M declined $175M YoY on compensation timing and inventory build; FY25 FCF guide reset exclusively due to tariff payments .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Billions)	$4.863	$5.319	$4.777
Diluted EPS (GAAP)	$1.02	$1.57	$1.23
Adjusted EPS ($)	$1.14	$1.45	$1.01
Adjusted EBIT Margin %	16.3%	18.7%	15.0%
Net Income Margin %	9.7%	13.5%	11.8%
Free Cash Flow ($USD Millions)	$651	$811	$98

Segment breakdown (Q1 2025):

Segment	Revenue ($USD Millions)	EBIT Margin %	YoY Organic Growth %
Imaging	$2,140	9.3%	+5%
Advanced Visualization Solutions	$1,239	21.1%	+3%
Patient Care Solutions	$753	6.4%	+2%
Pharmaceutical Diagnostics	$632	32.4%	+8%

KPIs:

KPI	Q1 2025
Book-to-Bill	1.09x
Organic Orders Growth YoY	+10%
Backlog	$20.6B
R&D Investment (% of Sales)	7%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Organic Revenue Growth	FY 2025	2%–3%	2%–3%	Maintained
Adjusted EBIT Margin	FY 2025	16.7%–16.8%	14.2%–14.4%	Lowered
Adjusted Effective Tax Rate	FY 2025	22%–23%	21%–22%	Lowered
Adjusted EPS	FY 2025	$4.61–$4.75	$3.90–$4.10 (incl. ~$0.85 tariff impact)	Lowered
Free Cash Flow	FY 2025	≥$1.75B	≥$1.2B	Lowered
Tariff Assumptions	FY 2025	Not specified in Feb (China tariffs noted)	Bilateral U.S./China remain; U.S. RoW reciprocal tariffs return July 9; USMCA exemptions continue; excludes Sec. 232	Clarified

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2: Q3 2024; Q-1: Q4 2024)	Current Period (Q1 2025)	Trend
Tariffs/Macro	Q3: No tariff detail; China softness . Q4: FY25 guide included U.S.–China tariffs .	Detailed tariff impact: ~$475M EBIT; ~$0.85 EPS; cadence <$100M in Q2, ~$200M in Q3/Q4; >50% mitigation underway .	Tariff headwinds intensify; mitigation plan ramping .
China	Q3: Softness offsetting U.S./PDx . Q4: Continued market softness .	H1 decline expected; Q2 toughest; sequential improvement H2; VBP strategy aligned; local-for-local approach .	Gradual recovery expected H2; cautious stance .
AI/Technology	Q3: FDA approval of Flyrcado; AI projects . Q4: ~40 innovations; enterprise deals .	Flyrcado launched; CMS pass-through; Revolution Vibe CT; Photon Counting CT submission on track .	Accelerating product cycle; growing recurring revenue .
Supply Chain/Operations	Q3: Lean initiatives driving margins . Q4: Productivity benefits .	New lean system reduced past-due backlog by >$25M; inventory built to support volume amid tariffs .	Operational efficiency improving; inventory managed .
PDx Product Performance	Q3: +7% organic; margin 30.9% . Q4: +9% organic; margin 32.9% .	+8% organic; margin >32% with NMP acquisition and Flyrcado uptake .	Sustained strength; pipeline expansion .
Regulatory	Q3: Multiple FDA clearances . Q4: New clearances and submissions .	No downstream impacts from agency changes; Photon Counting CT submission still on track for 2025/approval 2026 .	Stable regulatory cadence .

Management Commentary

“Record double-digit orders growth…strength in the U.S. market, where we see customers prioritizing investments in imaging…cardiology and oncology.” – CEO Peter Arduini .
“Prior to mitigation, the gross impact of tariffs is estimated to be approximately $1.75 per share…we’ve…mitigate[d] over 50%…we expect approximately $0.80 per share of net incremental impact…total impact…$0.85.” – CEO Peter Arduini .
“Adjusted gross margin expanded 80bps YoY…driven by increased volume and higher margin new products…lean management reduced past-due backlog by over $25M.” – CFO Jay Saccaro .
“We delivered the first commercial doses of Flyrcado…completed the acquisition of…Nihon Medi-Physics, which we expect to add ~$150M of inorganic revenue over the remaining 3 quarters of 2025.” – CFO Jay Saccaro .
“We currently expect Q2 2025 organic revenue growth 1%–2% and a high-single-digit decline YoY on adjusted EPS including tariffs.” – CFO Jay Saccaro .

Q&A Highlights

Tariff cadence and mitigation: ~<$100M impact in Q2; ~$200M in Q3/Q4; < $0.85 EPS impact expected in 2026 as local-for-local manufacturing and multisourcing actions scale .
China dynamics and VBP: Mid-single-digit decline in H1; Q2 toughest; sequential improvement in H2; VBP factored into go-to-market and configurations; local partnerships/JVs to position as local player .
Free cash flow: FY25 FCF lowered solely due to tariff payments; Q1 FCF down on comp timing and inventory build; business remains strong cash generator .
Semiconductor/rare elements risk: Semiconductor tariffs reflected but not most significant; rare earths not a long-term concern due to multisourcing and inventory buffers .
M&A posture: Environment may present tuck-in opportunities to accelerate growth and margins; capital allocation priorities unchanged .

Estimates Context

Actual vs S&P Global Wall Street Consensus (Q1 2025):

Metric	Consensus	Actual	# of Estimates
Primary EPS ($)	0.913*	1.01*	13*
Revenue ($USD Billions)	4.655*	4.777	13*
EBITDA ($USD Millions)	794*	842*	—

Values marked with * retrieved from S&P Global.

GEHC beat consensus across EPS, revenue, and EBITDA, with operational strength in U.S. demand and productivity offsets; however, tariff-driven FY25 guidance implies estimate downgrades to margins, EPS, and FCF despite maintained 2–3% organic growth outlook .

Key Takeaways for Investors

Q1 beat on EPS/revenue/EBITDA vs Street; book-to-bill 1.09x and +10% organic orders signal durable demand entering Q2 .
FY25 guidance reset is tariff-driven, not demand-driven: organic revenue growth held at 2–3%, but margin/EPS/FCF cut; expect heavier tariff P&L impact in H2 as high-cost inventory liquidates .
PDx strength and cardiology-focused innovations (Flyrcado with CMS pass-through, Revolution Vibe CT) support mix and margin over time; NMP integration adds scale and ~$150M inorganic revenue in 2025 .
PCS margin is the weak spot; management targeting product launches, automation, and supplier consolidation to improve profitability .
China approach is measured: H1 decline with H2 sequential improvement; local-for-local manufacturing and JV channels to mitigate tariff and policy risk .
Operational levers (lean, backlog conversion, pricing) provide offsets; >$25M backlog improvements showcased; share repurchase authorization ($1B) offers capital returns optionality .
Near-term trading: watch tariff headlines and Q2 cadence (<$100M impact) vs H2 (~$200M per quarter) and potential reciprocal tariff moderation; medium term, product cycle and radiopharma expansion underpin margin recovery into 2026 .