10-QPeriod: Q1 FY2023

GE HealthCare Technologies Inc. Quarterly Report for Q1 Ended Mar 31, 2023

Filed April 25, 2023For Securities:GEHC

Summary

GE HealthCare Technologies Inc. (GEHC) reported its first quarterly results as an independent public company following its spin-off from General Electric in January 2023. For the first quarter of 2023, the company demonstrated solid revenue growth, with total revenues increasing by 8% to $4.7 billion, or 12% on an organic basis, driven by strong performance across all its reporting segments: Imaging, Ultrasound, Patient Care Solutions (PCS), and Pharmaceutical Diagnostics (PDx). Despite the revenue growth, net income attributable to GE HealthCare saw a slight decrease of 4% to $372 million compared to the prior year. This was primarily due to increased interest expenses from new debt issuance and higher non-operating benefit costs related to pension plans transferred during the spin-off. The company also completed a strategic acquisition of Caption Health for $127 million, bolstering its AI-guided ultrasound capabilities. GEHC maintained a strong liquidity position with $2.3 billion in cash and cash equivalents and access to $3.5 billion in revolving credit facilities.

Financial Highlights

50 data points
Beta

Revenue

$4.71B

40.2% Gross Margin

Net Income

$372.00M

7.9% Net Margin

EPS (Diluted)

$0.41

Total Assets

$32.64B

Cash & Equivalents

$2.33B

Free Cash Flow

$325.00M

Financial Statements
Beta
Revenue$4.71B
Gross Profit$1.89B
R&D Expenses$270.00M
SG&A Expenses$1.06B
Operating Expenses$1.33B
Operating Income$559.00M
Net Income$372.00M
EPS (Basic)$0.42
EPS (Diluted)$0.41
Shares Outstanding (Basic)454.00M
Shares Outstanding (Diluted)457.00M

Key Highlights

  • 1Total revenues increased by 8% to $4.7 billion, with organic revenue growth of 12%, indicating strong underlying demand across all segments.
  • 2Imaging segment revenue grew 8% (12% organic), Ultrasound grew 5% (10% organic), PCS grew 9% (11% organic), and PDx grew 15% (19% organic), showcasing broad-based strength.
  • 3Net income attributable to GE HealthCare decreased by 4% to $372 million, impacted by higher interest expenses and post-spin-off pension plan costs.
  • 4Operating income increased by 10% to $559 million, demonstrating improved operational performance before considering financing and other non-operating items.
  • 5The company acquired Caption Health for $127 million to enhance its AI-guided ultrasound offerings.
  • 6Cash from operating activities remained strong at $468 million, though free cash flow decreased by 12% to $325 million due to working capital changes and increased capital expenditures.
  • 7GE HealthCare ended the quarter with $2.3 billion in cash and cash equivalents and access to $3.5 billion in credit facilities, indicating a healthy liquidity position.

Frequently Asked Questions

GE HealthCare reported a total revenue of $4.7 billion for the first quarter of 2023, an increase of 8% compared to the prior year. On an organic basis, which excludes the impact of foreign currency exchange rates and acquisitions/dispositions, revenue grew by 12%. This growth was observed across all its key segments: Imaging, Ultrasound, Patient Care Solutions (PCS), and Pharmaceutical Diagnostics (PDx).

The spin-off in January 2023 has several financial implications. The company's financial statements are now presented as an independent entity. There's an increase in interest expense due to newly issued debt to fund operations and capital structure. Additionally, the company assumed certain pension and postretirement benefit plan liabilities from GE, which led to higher non-operating benefit costs. The company also incurred separation and integration costs.

While revenue grew, net income attributable to GE HealthCare decreased by 4% to $372 million. This was primarily driven by a significant increase in 'Interest and other financial charges – net,' which rose by $132 million, largely due to new debt issued in late 2022 and early 2023. Additionally, 'Non-operating benefit (income) costs' increased by $113 million, primarily related to the pension plans transferred from GE as part of the spin-off.

GE HealthCare maintains a strong liquidity position. As of March 31, 2023, the company had $2.3 billion in cash, cash equivalents, and restricted cash. Furthermore, it has access to $3.5 billion in aggregate committed revolving credit facilities. Management believes these resources, combined with operating cash flow, are sufficient to meet its obligations for at least the next 12 months.