GE HealthCare (GEHC) opened earnings season with results that came in slightly ahead of expectations. The company reported third-quarter earnings per share of $1.07 on $5.1 billion in revenue. Analysts had forecast $1.05 a share on $5.1 billion in sales.
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A year earlier, GE HealthCare earned $1.14 per share on $4.9 billion in revenue. The comparison shows how higher costs are starting to weigh on profits even as sales continue to grow.
Spun out of General Electric in 2023, the healthcare technology firm has relied on steady demand in imaging and diagnostics to sustain growth. Tariff-related costs have pushed expenses higher, making operations more expensive. GE HealthCare said that without the tariff impact, earnings would have increased year over year. That suggests the company’s underlying business remains strong despite broader economic headwinds.
CEO Peter Arduini Highlights Innovation and Execution
“We delivered robust orders with growth across all segments in the third quarter,” said CEO Peter Arduini. “We continue to see momentum with commercial execution…as a result of our increased R&D investments, we are entering a new wave of innovation and, coupled with our focus on lean, we expect to accelerate top and bottom line growth.”
Arduini’s emphasis on innovation comes at a pivotal time. The company has been investing heavily in next-generation imaging systems, diagnostic tools, and AI-powered analytics aimed at improving hospital efficiency. These R&D outlays appear to be paying off, with imaging sales climbing 5% to $2.3 billion and advanced visualization products, used in cardiology and oncology, rising 7% to $1.3 billion. Still, profitability remains under pressure until tariffs ease or productivity gains fully offset them.
Orders Outpace Sales as Backlog Builds
Comparable orders grew 6% year over year, while total bookings once again outpaced revenue, with a book-to-bill ratio of roughly 1.1. That means GE HealthCare is selling more than it can currently deliver, a positive sign for its future revenue trajectory. The strength in orders came across all major regions, underscoring continued demand for its diagnostic and imaging solutions even amid uneven global economic conditions.
Pharmacological diagnostics stood out with 20% growth, reaching $749 million, while Patient Care Solutions, one of GE HealthCare’s more mature segments, fell 6% to $731 million. The company has been working to streamline this business and focus resources on higher-growth areas, an effort that could lift margins in coming quarters if trends continue.
Updated Outlook Shows Confidence Despite Challenges
Management slightly raised its full-year EPS outlook to $4.51–$4.63 from a prior range of $4.43–$4.63. The guidance implies fourth-quarter earnings near $1.45 per share, above analysts’ current estimate of $1.39. The update suggests that GE HealthCare expects its backlog and productivity initiatives to carry momentum into year-end, even as tariffs weigh on profitability.
Still, investors appeared unconvinced. Shares opened slightly higher in early trading but quickly reversed, falling 3% to around $77, even as the S&P 500 (SPX) and Dow Jones Industrial Average (DJIA) edged higher. The muted reaction shows that Wall Street wants to see clearer evidence that GE HealthCare can protect margins while maintaining growth, especially after a period when tariff costs and inflation have clouded visibility.
Analyst Reaction Keeps Expectations in Check
Citi (C) analyst Joanne Wuensch called the quarter “straightforward” in a Wednesday report. With shares up just 2% this year and still 7% lower over the past 12 months, expectations coming into earnings were modest. Investors have been looking for signs of margin recovery and operating leverage before re-rating the stock higher.
For now, the message is mixed. GE HealthCare is executing well, innovating aggressively, and delivering steady growth across most segments. But with tariffs biting into profits, management’s push for efficiency and lean operations will need to deliver tangible results before the market rewards it.
Tariff Headwinds Challenge the Path Forward
The quarter reaffirmed GE HealthCare’s competitive strength in imaging and diagnostics, but also its sensitivity to external cost pressures. Unless tariffs ease or pricing improves, the company’s next leg of growth will depend on whether efficiency gains can translate into margin expansion.
It seems like GE HealthCare’s business is still holding up well beneath the surface. But investors want to see whether the company’s “new wave of innovation” can really deliver consistent earnings growth. Until there’s clearer evidence of that, the stock may stay in wait-and-see mode.
Is GE Healthcare a Good Stock to Buy?
Wall Street’s outlook on GE HealthCare Technologies (GEHC) remains constructive but measured. Based on nine recent analyst ratings, the stock carries a “Moderate Buy” consensus. Five analysts recommend a Buy, while four suggest a Hold, and none have issued a Sell rating.
The average 12-month GEHC price target sits at $85.89, implying a 10.83% upside from the current price.
