GE HealthCare (NASDAQ:GEHC) on Wednesday announced it would combine Imaging and Advanced Visualization Solutions (AVS) to create Advanced Imaging Solutions (AIS), a $14.6 billion segment.
GE HealthCare Combines Largest Segments
The combination brings together GE HealthCare’s two largest segments to create a more focused and connected end-to-end imaging ecosystem spanning diagnosis, intervention, and follow-up across disease states.
Q1 Earnings Miss
The healthcare solutions provider reported first-quarter adjusted earnings of 99 cents per share, missing the consensus of $1.05.
Sales jumped 7.4% year over year to $5.13 billion, surpassing the Wall Street estimate of $5.04 billion.
Total orders up 1.1% organically versus 10.3% growth in the year-ago period, book-to-bill of 1.07 times, and backlog of $21.8 billion.
Segment Performance Mixed Across Portfolio
Imaging sales jumped 3.8% to $2.14 billion. Segment profit performance benefited primarily from volume, offset by tariff impact.
AVS sales reached 1.24 billion, up 4.4%, driven by volume and contract settlements, partially offset by tariffs.
Patient Care Solutions’ revenues were $753 million, down 8.1%, primarily due to select large monitoring installations being more concentrated in the second half of the year; orders grew in the first quarter.
Pharmaceutical Diagnostics sales were up 9.7% to $632 million, driven by volume and price in contrast media and new radiopharmaceutical products, including nearly 80% growth in Flyrcado doses since late January.
Inflation Pressures Impact Profitability Outlook
GE HealthCare President and CEO Peter Arduini said, “Profitability in the first quarter was impacted by a PDx supplier issue that has since been resolved. We saw significant increases in memory chips, oil, and freight costs during the first quarter that we assume will impact the rest of 2026.”
The company said the inflation landscape changed significantly in the first quarter, increasing expected input costs by around $250 million in 2026.
“Given these dynamics, we are taking a prudent approach and reducing our profit outlook, but expect to offset more than half of the inflation impact with price and cost actions,” Arduini further added.
The company cut profit and Free cash flow 2026 outlook due to specific inflationary items to mitigate macro impacts through price and cost actions.
2026 Guidance Cut On Cost Headwinds
GE HealthCare lowered its fiscal 2026 adjusted earnings guidance from $4.95-$5.15 per share to $4.80-$5.00 per share, compared to the consensus estimate of $5.07.
The company expects 2026 free cash flow of approximately $1.6 billion, compared to previous guidance of approximately $1.7 billion.
GEHC Price Action: GE HealthCare Techs shares were down 11.65% at $60.52 at the time of publication on Wednesday. The stock is trading at a new 52-week low, according to Benzinga Pro data.
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