Financial Performance - The company reported revenues of $5 billion in Q2 2025, with organic growth of 2%, at the high end of the expected range [10] - Service revenue grew by 7%, driven by global growth in new and existing customer agreements, while product revenue increased by 2% [10] - Adjusted EBIT margin was 14.6%, down 80 basis points year over year due to tariff impacts, partially offset by lean actions and volume [11] - Adjusted EPS was $1.06 per share, up 6% year over year, including approximately $0.08 impact from tariffs [12] - Free cash flow was $7 million, up $189 million compared to the prior year [12] Business Segment Performance - Imaging segment organic revenue was up 1%, driven by strong execution in EMEA and the U.S., offset by challenges in China [14] - Advanced Visualization Solutions saw organic revenue growth of 2% year over year, with EBIT margin increasing by 20 basis points [15] - Patient Care Solutions had flat organic revenue year over year, with EBIT margin declining by 240 basis points due to inflation and unfavorable portfolio mix [17] - Pharmaceutical Diagnostics delivered 5% organic growth, with EBIT margin declining by 200 basis points due to planned investments and FX headwinds [18] Market Performance - Orders growth was up 3% year over year, with a record backlog of $21.3 billion, up $2.2 billion year over year [11] - The U.S. market is experiencing a robust replacement cycle due to an aging installed base, while Europe shows recovery in capital decision-making [36][40] - China is seeing activity pick up, but the recovery is slower than expected, with a cautious outlook for the second half of the year [84][86] Company Strategy and Industry Competition - The company is focused on its Precision Care strategy, with significant wins in enterprise deals and collaborations [6][7] - The D3 strategy aims to bring world-class solutions to market, leveraging digital and AI technologies [8] - The innovation pipeline includes new product launches expected to drive growth and improve margins [32][110] Management Commentary on Operating Environment and Future Outlook - Management expressed optimism about customer investment and operational execution, despite a mixed macroeconomic landscape [10] - The company raised its organic revenue growth guidance for 2025 to approximately 3%, reflecting positive customer sentiment [24] - Tariff impacts are expected to decrease in 2026, with ongoing mitigation actions in place [22][48] Other Important Information - The company announced a share repurchase program of $1 billion and repurchased approximately $100 million of shares in Q2 [20] - The adjusted effective tax rate is expected to be in the range of 20% to 21% for the full year, an improvement from prior guidance [24] Q&A Session Summary Question: Capital environment across different regions - Management noted robust replacement cycles in the U.S. and recovery in Europe, while China is taking longer to recover [36][84] Question: Tariff mitigation actions - The company is implementing no-regret moves and restructuring the supply chain to mitigate tariff impacts [46][48] Question: Order book growth deceleration - Management acknowledged a deceleration in order growth but emphasized the importance of looking at longer-term trends [58][60] Question: Progress with Flurcato and barriers to adoption - Management is pleased with progress and is addressing barriers such as reimbursement cycle times [70][71] Question: China market outlook - Management sees activity picking up in China but is cautious about the pace of recovery [84][86] Question: Guidance for the rest of the year - Management is confident in the second half guidance due to strong order growth and backlog [90][92]

Financial Data and Key Metrics Changes - The company reported revenues of $5 billion in Q2 2025, with organic growth of 2%, at the high end of the expected range [10] - Adjusted EPS was $1.06 per share, up 6% year over year, despite approximately $0.08 impact from tariffs [12] - Free cash flow was $7 million, an increase of $189 million compared to the prior year [12] Business Line Data and Key Metrics Changes - Imaging segment organic revenue grew 1% year over year, driven by strong execution in EMEA and the U.S., but offset by challenges in China [14] - Advanced Visualization Solutions saw organic revenue increase of 2% year over year, with EBIT margin up 20 basis points due to productivity and volume [15] - Patient Care Solutions had flat organic revenue year over year, with growth in Monitoring Solutions offset by declines in Life Support Solutions [16] - Pharmaceutical Diagnostics delivered 5% organic growth, although EBIT margin declined 200 basis points due to planned investments and FX headwinds [18] Market Data and Key Metrics Changes - The U.S. market showed robust demand driven by an aging installed base and new clinical products, while Europe experienced recovery in capital decisions [40][41] - Emerging markets, particularly Indonesia and Latin America, showed positive activity, while the recovery in China is taking longer than expected [42] Company Strategy and Development Direction - The company is focused on its Precision Care strategy, with significant wins in enterprise deals and collaborations, including a $90 million deal with Ascension [7][8] - The D3 strategy aims to bring world-class solutions to market, leveraging digital and AI technologies [8] - The company is optimistic about future growth, driven by customer investment and operational execution [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding customer investment and operational execution, despite a mixed macroeconomic landscape [9] - The company raised its organic revenue growth guidance for 2025 to approximately 3%, reflecting positive customer sentiment [24] - Adjusted EBIT margin forecast for the full year is now between 15.2% and 15.4%, an increase from previous guidance [25] Other Important Information - The company announced a share repurchase program of $1 billion and repurchased approximately $100 million of its shares in Q2 [20] - The global tariff environment has improved, with the company implementing mitigation actions to reduce tariff impacts [22] Q&A Session Summary Question: Can you talk about the capital environment across different regions, U.S., Europe, and whether China's bottoming? - Management noted robust replacement cycles in the U.S. due to an aging installed base and strong demand for new clinical products, while Europe is recovering from previous pauses in capital decisions [36][40][42] Question: Can you elaborate on the actions the company is taking regarding tariffs? - The company is implementing immediate no-regret moves and longer-term restructuring of the supply chain to mitigate tariff impacts [46][49] Question: What are the drivers behind the order growth deceleration in Q2? - Management acknowledged that while Q2 order growth was 3%, it was below Q1 expectations, but emphasized the importance of looking at longer-term trends rather than quarterly fluctuations [56][58] Question: What feedback are you hearing from customers regarding Flurcato? - Management reported positive feedback on image quality and progress in expanding manufacturing capabilities, with a focus on improving reimbursement cycle times [64][70] Question: How should we think about the cadence for the rest of the year? - Management expressed confidence in the second half of the year, supported by strong order growth and backlog, with expectations for a stronger fourth quarter [88][90]