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GE HealthCare Technologies (GEHC) - 2024 Q2 - Quarterly Report
GEHCGE HealthCare Technologies (GEHC)2024-07-31 10:26
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Revenue Performance - Total revenues for Q2 2024 were 4,839million,approximatelyflatcomparedtoQ22023,witha14,839 million, approximately flat compared to Q2 2023, with a 1% organic growth [151]. - Sales of services increased by 2% or 28 million, while sales of products decreased by 1% or 6million[151].−Imagingsegmentrevenueswere6 million [151]. - Imaging segment revenues were 2,596 million, a decrease of 1% or 24million,impactedbylowervolumeinChinaandunfavorableforeigncurrencyeffects[152].−Ultrasoundsegmentrevenueswere24 million, impacted by lower volume in China and unfavorable foreign currency effects [152]. - Ultrasound segment revenues were 823 million, down 2% or 16million,primarilyduetolowersalesvolumeinChina[152].−PatientCareSolutions(PCS)segmentrevenueswere16 million, primarily due to lower sales volume in China [152]. - Patient Care Solutions (PCS) segment revenues were 772 million, flat compared to the prior year, with 1% organic growth [152]. - Pharmaceutical Diagnostics (PDx) segment revenues grew by 12% or 71million,drivenbyvolumegrowthandnewproductintroductions[152].−RevenuesfromtheUSandCanada(USCAN)increasedby571 million, driven by volume growth and new product introductions [152]. - Revenues from the US and Canada (USCAN) increased by 5% or 104 million, with growth across all segments [152]. - Revenues from the China region decreased by 18% or 131million,affectedbydelayedstimulusandongoinganti−corruptioncampaigns[152].−TotalrevenuesforthesixmonthsendedJune30,2024,were131 million, affected by delayed stimulus and ongoing anti-corruption campaigns [152]. - Total revenues for the six months ended June 30, 2024, were 9,489 million, flat compared to the prior year [154]. - Total revenues for the three months ended June 30, 2024, were 4,839million,aslightincreaseof14,839 million, a slight increase of 1% compared to the same period in 2023 [176]. - Organic revenue for the six months ended June 30, 2024, was 9,565 million, remaining stable compared to 9,524millionin2023[176].IncomeandEarnings−OperatingincomeforthethreemonthsendedJune30,2024,was9,524 million in 2023 [176]. Income and Earnings - Operating income for the three months ended June 30, 2024, was 608 million, a 7% increase from 570millioninthesameperiodof2023[156].−NetincomeattributabletoGEHealthCareforthethreemonthsendedJune30,2024,was570 million in the same period of 2023 [156]. - Net income attributable to GE HealthCare for the three months ended June 30, 2024, was 428 million, reflecting a 2% increase from 418millionintheprioryear[156].−AdjustedEBITforthethreemonthsendedJune30,2024,was418 million in the prior year [156]. - Adjusted EBIT for the three months ended June 30, 2024, was 742 million, a 4% increase from 711millioninthesameperiodof2023[156].−AdjustednetincomeforthesixmonthsendedJune30,2024,was711 million in the same period of 2023 [156]. - Adjusted net income for the six months ended June 30, 2024, was 872 million, an 8% increase from 807millionintheprioryear[163].−AdjustednetincomeforthethreemonthsendedJune30,2024,was807 million in the prior year [163]. - Adjusted net income for the three months ended June 30, 2024, was 459 million, reflecting a 10% increase from 419millionin2023[183].−AdjustedearningspershareforthethreemonthsendedJune30,2024,was419 million in 2023 [183]. - Adjusted earnings per share for the three months ended June 30, 2024, was 1.00, up from 0.92in2023,representinganincreaseof90.92 in 2023, representing an increase of 9% [185]. - The net income margin for the three months ended June 30, 2024, improved to 8.9%, up 20 basis points from 8.7% in 2023 [180]. Expenses and Investments - R&D investments increased by 29 million, contributing to a rise in R&D as a percentage of total revenues by 60 basis points [160]. - Total operating expenses increased by 25 million, with SG&A expenses decreasing by 5 million due to cost-saving initiatives [160]. - Cash used for capital expenditures was 209millionforthesixmonthsendedJune30,2024,primarilyformanufacturingcapacityexpansionandnewproductintroductions[199].CashFlowandDebt−FreecashflowforthesixmonthsendedJune30,2024,was209 million for the six months ended June 30, 2024, primarily for manufacturing capacity expansion and new product introductions [199]. Cash Flow and Debt - Free cash flow for the six months ended June 30, 2024, was 92 million, a decrease of 51% from 189millionin2023,drivenbya25189 million in 2023, driven by a 25% decline in cash from operating activities [189][198]. - Cash generated from operating activities for the six months ended June 30, 2024, was 300 million, down from 401millionin2023,withnetincomeof401 million in 2023, with net income of 823 million in 2024 compared to 816millionin2023[193][194].−CashusedforinvestingactivitiesinthesixmonthsendedJune30,2024,was816 million in 2023 [193][194]. - Cash used for investing activities in the six months ended June 30, 2024, was 537 million, including 259millionfortheacquisitionofMIMSoftwareInc.and259 million for the acquisition of MIM Software Inc. and 209 million for capital expenditures [195][196]. - Total debt as of June 30, 2024, was 9,240million,adecreasefrom9,240 million, a decrease from 9,442 million at the end of 2023, primarily due to a 150millionrepaymentoftheTermLoanFacility[202].−Thecompanyhad150 million repayment of the Term Loan Facility [202]. - The company had 2,015 million in cash, cash equivalents, and restricted cash as of June 30, 2024, along with access to 3,500millioninrevolvingcreditfacilities[191][204].−Theweightedaverageinterestrateforthecompany′snotesandcreditfacilitiesforthesixmonthsendedJune30,2024,was6.083,500 million in revolving credit facilities [191][204]. - The weighted average interest rate for the company's notes and credit facilities for the six months ended June 30, 2024, was 6.08% [203]. - The company plans to continue relying on capital markets and expects to have access to credit facilities to fund operations, with current credit ratings of Baa2 from Moody's, BBB from S&P, and BBB from Fitch [206][207]. Segment Performance - Imaging Segment EBIT was 526 million, an increase of 57millionduetocostproductivityandanincreaseinprice,partiallyoffsetbycostinflation[175].−UltrasoundSegmentEBITwas57 million due to cost productivity and an increase in price, partially offset by cost inflation [175]. - Ultrasound Segment EBIT was 360 million, a decrease of 38millionduetocostinflationandadecreaseinsalesvolume,particularlyinChina[175].−PDxSegmentEBITwas38 million due to cost inflation and a decrease in sales volume, particularly in China [175]. - PDx Segment EBIT was 378 million, an increase of 71millionduetogrowthinsalesvolume,anincreaseinprice,andcostproductivity,partiallyoffsetbycostinflationandinvestments[175].−Imagingsegmentrevenueswere71 million due to growth in sales volume, an increase in price, and cost productivity, partially offset by cost inflation and investments [175]. - Imaging segment revenues were 5,062 million, a decrease of 1% or 54millioncomparedtotheprioryear,impactedbyunfavorableforeigncurrencyeffects[156].−USCANrevenuesincreasedby354 million compared to the prior year, impacted by unfavorable foreign currency effects [156]. - USCAN revenues increased by 3% or 114 million to 4,336million,supportedbygrowthinPDxandImagingrevenues[156].GeopoliticalandMarketConditions−Thecompanycontinuestomonitortheimpactofgeopoliticalfactors,includingtheRussia−UkraineconflictandmarketconditionsinChina[140].−RemainingPerformanceObligations(RPO)asofJune30,2024,decreasedby14,336 million, supported by growth in PDx and Imaging revenues [156]. Geopolitical and Market Conditions - The company continues to monitor the impact of geopolitical factors, including the Russia-Ukraine conflict and market conditions in China [140]. - Remaining Performance Obligations (RPO) as of June 30, 2024, decreased by 1% to 14,531 million from 14,655millionasofDecember31,2023,primarilyduetofulfillmentandcancellationsoutpacingnewcontracts[155].−Thecompanyexperiencedasignificantoutflowof14,655 million as of December 31, 2023, primarily due to fulfillment and cancellations outpacing new contracts [155]. - The company experienced a significant outflow of 820 million from changes in assets and liabilities in the first half of 2024, mainly due to compensation and benefit payments and inventory build [193].