Q4 2022 GE HealthCare Technologies Inc Earnings Call

January 30, 2023

Conference is being recorded I would now.

Like to turn the program over to your host for today's conference Caroline borders Chief Investor Relations Officer. Please proceed.

Peter Arduini: This is equivalent to the 14.5% on a standalone basis. Looking ahead, we have several levers to expand margins through strategic pricing, enhancing volume and mix, and increasing variable cost productivity, as discussed at our Investor Day. Adjusted EPS for the full year was $4.63, and our standalone adjusted EPS result was $3.38. Free cash flow was $1.8 billion in 2022, and Helmut will discuss guidance in greater detail here later in the call. Overall, we're pleased with the strong performance we delivered in 2022. We're encouraged by the easing supply chain pressures and the resilient end market demand we're seeing across our portfolio, and we remain confident in our ability to drive sustainable value creation in 2023. I'd also like to highlight an important announcement we recently made with the appointment of Dr. Taha Kass-Hout as our Chief Technology Officer.

This is equivalent to the 14.5% on a standalone basis. Looking ahead, we have several levers to expand margins through strategic pricing, enhancing volume and mix, and increasing variable cost productivity, as discussed at our Investor Day. Adjusted EPS for the full year was $4.63, and our standalone adjusted EPS result was $3.38. Free cash flow was $1.8 billion in 2022, and Helmut will discuss guidance in greater detail here later in the call. Overall, we're pleased with the strong performance we delivered in 2022. We're encouraged by the easing supply chain pressures and the resilient end market demand we're seeing across our portfolio, and we remain confident in our ability to drive sustainable value creation in 2023. I'd also like to highlight an important announcement we recently made with the appointment of Dr. Taha Kass-Hout as our Chief Technology Officer.

Thanks, Michelle welcome to GE Healthcare's fourth quarter and full year 2022 earnings call I'm joined by our President and CEO , Peter Arduini, and Vice President and CFO Helmuth <unk>. Our conference call remarks will include both GAAP and non-GAAP financial results.

Reconciliations between GAAP and non-GAAP measures can be found in today's press release and in the presentation slides available on our website. During this call. We will make forward looking statements about our performance. These statements are based on how we see things today as described in our SEC filings actual results.

May differ materially due to risks and uncertainties and with that I'll hand, the call over to Peter. Thank you Carolyn and good morning, everyone. Welcome to our first earnings call as an independent publicly traded company I'm incredibly proud of the work our team has done to complete the spinoff of GE healthcare.

Energy across the company is probable and there is tremendous excitement and focus around our purpose to create a world where health care has no limits.

Peter Arduini: Taha is leading our science and technology organization, as well as our efforts to drive growth through clinical research and the advancement of our digital and machine learning capabilities, specifically our Edison Digital Health Platform. He joins us with deep clinical, digital, and machine learning experience. Taha was most recently Vice President of Machine Learning and Chief Medical Officer at Amazon. Taha also served as the FDA's first informatics leader, and he's joining the team at a perfect time as we accelerate investments in digital products and software. As we invest in our business, we're continuing to make progress on enhancing our operating model to better serve customers through a simplified, more decentralized model, and we're reducing bureaucracy in the organization, optimizing our geographic footprint, and implementing platforming initiatives across key product lines.

Taha is leading our science and technology organization, as well as our efforts to drive growth through clinical research and the advancement of our digital and machine learning capabilities, specifically our Edison Digital Health Platform. He joins us with deep clinical, digital, and machine learning experience. Taha was most recently Vice President of Machine Learning and Chief Medical Officer at Amazon. Taha also served as the FDA's first informatics leader, and he's joining the team at a perfect time as we accelerate investments in digital products and software. As we invest in our business, we're continuing to make progress on enhancing our operating model to better serve customers through a simplified, more decentralized model, and we're reducing bureaucracy in the organization, optimizing our geographic footprint, and implementing platforming initiatives across key product lines.

I want to thank all of our team for their commitment to the customers and patients we serve as we chart our own path forward and execute on our precision care strategy.

Let's start with our fourth quarter 2022 performance, we delivered strong organic revenue growth of 13% year over year, reflecting an acceleration from prior quarters in 2022.

Speaker 2: Helmut Zoto. Our conference call remarks will include both GAAP and non-GAAP financial results. Reconciliations between GAAP and non-GAAP measures can be found in today's press release and in the presentation slides available on our website. During this call, we'll make forward-looking statements about our performance.

These results were driven by continued robust demand.

Backlog fulfillment and improved pricing in addition supply chain pressures that we experienced earlier in the year eased continuing the trend we experienced in the third quarter.

Adjusted EBIT margin was 17, 1%.

Speaker 3: These statements are based on how we see things today. As described in our SEC filings, actual results may differ materially due to risks and uncertainties. And with that, I'll hand the call over to Peter. Thank you, Carolyn, and good morning, everyone. Welcome to our first earnings call as an independent, publicly traded company.

Volume and price improved in the fourth quarter, but this was offset by inflation mix planned R&D investments and some foreign exchange headwinds.

Peter Arduini: With that, let me hand the call over to Helmut to walk through our financials and business segment performance. Helmut?

With that, let me hand the call over to Helmut to walk through our financials and business segment performance. Helmut?

We saw sequential margin improvement as volume and price grew in logistics costs eased with the discipline optimization actions, we've taken across the business.

Helmut Zottl: Thanks, Pete. Let's take a closer look at our financial performance in Q4. Revenues of $4.9 billion increased 8% year over year and were up 13% on an organic basis. Reported product revenues increased 13% versus the prior year, led by imaging, patient care solutions, and ultrasound. Reported services revenues declined 2%, mainly due to the unfavorable impact of foreign exchange, partly offset by growth in our core services business. We are pleased with product growth in the quarter that will lead to additional services revenue. Now, I'd like to talk about the actions we are taking to increase margins through improving delivery, price, and cost. As always, delivering for our customers is our number one priority.

Helmut Zodl: Thanks, Pete. Let's take a closer look at our financial performance in Q4. Revenues of $4.9 billion increased 8% year over year and were up 13% on an organic basis. Reported product revenues increased 13% versus the prior year, led by imaging, patient care solutions, and ultrasound. Reported services revenues declined 2%, mainly due to the unfavorable impact of foreign exchange, partly offset by growth in our core services business. We are pleased with product growth in the quarter that will lead to additional services revenue. Now, I'd like to talk about the actions we are taking to increase margins through improving delivery, price, and cost. As always, delivering for our customers is our number one priority.

This result is equivalent to 16, 1% on a standalone basis.

Speaker 4: I'm incredibly proud of the work our team has done to complete the spinoff of GE Healthcare. The energy across the company is palpable and there's tremendous excitement and focus around our purpose to create a world where healthcare has no limits.

Adjusted EPS was $1 31 impacted by incremental interest from debt issuance, partially offset by volume and price.

Speaker 5: I want to thank all of our team for their commitment to the customers and patients we serve as we chart our own path forward and execute on our precision care strategy.

In order to facilitate comparability on a go forward basis. We have also provided a standalone adjusted EPS result of $1 six.

Free cash flow was $987 million in the fourth quarter as we start to see supply chain issues ease and we improved collections year over year.

Speaker 6: Let's start with our fourth quarter 2022 performance. We delivered strong organic revenue growth of 13% year-over-year, reflecting an acceleration from prior quarters in 2022.

Total company book to Bill, which is a calculation of orders to revenues growth was 1.07 times led by strong orders growth in imaging and ultrasound.

Speaker 7: These results were driven by continued robust demand, backlog fulfillment, and improved pricing. In addition, supply chain pressures that we experienced earlier in the year eased, continuing the trend that we experienced in the third quarter. Justed EBIT margin was 17.1%.

Helmut Zottl: We've improved our access to key components, measured by the number of red flag parts that indicate constraints, and made good progress in requalifying, redesigning, and dual sourcing parts. In fact, we've requalified 7,700 parts since COVID began, and we are now seeing the lowest level of red flag parts since Q1 2021. We've also applied Lean principles to improve our supply chain. A great example of how we apply Lean across the organization was our CT output initiative this past quarter. We aligned factory output with customer installations to drive better end-to-end planning. This resulted in an improved customer experience and earlier deliveries in the quarter. We have achieved a positive sales price index for the third consecutive quarters now, and this price accretion occurred across each of our four, four segments in Q4.

We've improved our access to key components, measured by the number of red flag parts that indicate constraints, and made good progress in requalifying, redesigning, and dual sourcing parts. In fact, we've requalified 7,700 parts since COVID began, and we are now seeing the lowest level of red flag parts since Q1 2021. We've also applied Lean principles to improve our supply chain. A great example of how we apply Lean across the organization was our CT output initiative this past quarter. We aligned factory output with customer installations to drive better end-to-end planning. This resulted in an improved customer experience and earlier deliveries in the quarter. We have achieved a positive sales price index for the third consecutive quarters now, and this price accretion occurred across each of our four, four segments in Q4.

For the full year organic revenues grew 7% year over year at the higher end of our mid single digit growth target and while China was impacted by Covid for most of the year, we saw increased momentum coming out of the fourth quarter and we expect that to continue.

Speaker 8: Volume and price improved in the fourth quarter, but this was offset by inflation, mixed, planned R&D investments, and some foreign exchange headwinds.

Globally, we have a healthy backlog heading into 'twenty three as customers continue to invest in imaging ultrasound as well as Pcs.

Speaker 9: We saw sequential margin improvement as volume and price grew and logistics cost eased with the disciplined optimization actions we've taken across the business.

2022, adjusted EBIT margin was 15, 6% impacted by inflationary pressures and planned R&D investments. This is equivalent to 14, 5% on a standalone basis.

Speaker 10: This result is equivalent to 16.1% on a standalone basis.

Speaker 11: Justed EPS was $1.31 impacted by incremental interest from debt issuance, partially offset by volume and price.

Looking ahead, we have several levers to expand margins through strategic pricing enhancing volume and mix and increasing variable cross productivity as discussed at our Investor day.

Speaker 12: In order to facilitate comparability on a go-forward basis, we've also provided a standalone adjusted EPS result of $1.06.

Adjusted EPS for the full year was $4 63.

Speaker 13: Free cash flow was $987 million in the fourth quarter as we start to see supply chain issues ease and we improve collections year over year.

And our Standalone adjusted EPS result was $3 38.

Helmut Zottl: We are pleased with our progress in pricing and have good visibility on pricing our backlog. We are driving variable cost productivity through logistics and material cost reductions. We are also reducing our real estate footprint and optimizing our commercial organization. Turning to imaging. We saw strong organic revenue growth, up 18% year over year, led by molecular imaging, CT, MR, and surgery. Our customers remain focused on expansion of capacity and access to care. Looking ahead, we expect imaging demand will remain healthy, supporting top line growth. Following strong revenue growth in the fourth quarter, we expect growth will normalize as we move into the second half of the year. Segment EBIT margin declined 120 basis points year over year. We realized improving volume and price, but this was offset by headwinds from inflation, mix, and planned investments.

We are pleased with our progress in pricing and have good visibility on pricing our backlog. We are driving variable cost productivity through logistics and material cost reductions. We are also reducing our real estate footprint and optimizing our commercial organization. Turning to imaging. We saw strong organic revenue growth, up 18% year over year, led by molecular imaging, CT, MR, and surgery. Our customers remain focused on expansion of capacity and access to care. Looking ahead, we expect imaging demand will remain healthy, supporting top line growth. Following strong revenue growth in the fourth quarter, we expect growth will normalize as we move into the second half of the year. Segment EBIT margin declined 120 basis points year over year. We realized improving volume and price, but this was offset by headwinds from inflation, mix, and planned investments.

Free cash flow was $1 8 billion in 2022, and Helmut will discuss guidance in greater detail here later in the call.

Speaker 14: Total Company Book to Bill, which is a calculation of orders to revenues growth, was 1.07 times, led by strong orders growth in imaging and ultrasound.

Overall, we're pleased with the strong performance we delivered in 2022, we're encouraged by the easing supply chain pressures in the resilient end market demand, we're seeing across our portfolio and.

Speaker 15: For the full year, organic revenues grew 7% year over year at the higher end of our mid-single digit growth target.

And we remain confident in our ability to drive sustainable value creation in 2023.

Speaker 16: And while China was impacted by COVID for most of the year, we saw increased momentum coming out of the fourth quarter and we expect that to continue.

I'd also like to highlight an important announcement, we recently made with the appointment of Dr. Tahar cost food as our Chief Technology Officer, Tata is leading our science and technology organization as well as our efforts to drive growth through clinical research and the advancement of our digital and machine learning capabilities specifically.

Speaker 17: Globally, we have a healthy backlog heading into 23 as customers continue to invest in imaging, ultrasound, as well as PCS.

Speaker 18: 2022 adjusted EBIT margin was 15.6%, impacted by inflationary pressures and planned R&D investments.

Our Edison digital health platform.

Speaker 19: This is equivalent to the 14.5% on a standalone basis.

He joins us with deep clinical digital and machine learning experience Tahoe was most recently vice President of machine learning and Chief Medical Officer at Amazon.

Speaker 20: Looking ahead, we have several levers to expand margins through strategic pricing, enhancing volume and mix, and increasing variable cross productivity as discussed at our investor day.

<unk> also served as the Fda's first informatics leader and he is joining the team at a perfect time as we accelerated investments in digital products and software.

Helmut Zottl: Our double-digit investment in imaging R&D this quarter reflects our commitment to innovation and commercial growth. During the quarter, NPI's driving growth included our Revolution Apex CT with a scalable detector, as well as Revolution Ascend CT with improved imaging and workflow. Globally, we've already seen success using deep learning from improved image quality in MR with AIR Recon DL. We're now very proud to be the first to extend those capabilities to OmniLegend PET/CT, with precision deep learning available in select, select regions. Sequentially, EBIT margin increased one hundred and twenty basis points, driven by improved volume and price. We expect margin expansion in 2023 to be driven by NPIs, commercial execution, supply chain productivity, platforming, and digital. Overall, we are investing to drive technology leadership and have the opportunity to increase market share with strategic NPIs, digital and AI leadership, and a focus on care pathways.

Our double-digit investment in imaging R&D this quarter reflects our commitment to innovation and commercial growth. During the quarter, NPI's driving growth included our Revolution Apex CT with a scalable detector, as well as Revolution Ascend CT with improved imaging and workflow. Globally, we've already seen success using deep learning from improved image quality in MR with AIR Recon DL. We're now very proud to be the first to extend those capabilities to OmniLegend PET/CT, with precision deep learning available in select, select regions. Sequentially, EBIT margin increased one hundred and twenty basis points, driven by improved volume and price. We expect margin expansion in 2023 to be driven by NPIs, commercial execution, supply chain productivity, platforming, and digital. Overall, we are investing to drive technology leadership and have the opportunity to increase market share with strategic NPIs, digital and AI leadership, and a focus on care pathways.

Speaker 21: Adjusted EPS for the full year was $4.63 and our standalone adjusted EPS result was $3.38.

As we invest in our business, we're continuing to make progress on enhancing our operating model to better serve customers through a simplified more decentralized model.

Speaker 22: Free cash flow was $1.8 billion in 2022. And Helmut will discuss guidance in greater detail here later in the call.

And we're reducing bureaucracy and the organization optimizing our geographic footprint and implementing spending platforming initiatives across key product lines.

Speaker 23: Overall, we're pleased with the strong performance we delivered in 2022. We're encouraged by the easing supply chain pressures and the resilient end market demand we're seeing across our portfolio.

And with that let me hand, the call over to <unk> to walk through our financials and business segment performance.

Thanks Pete.

Speaker 24: and we remain confident in our ability to drive sustainable value creation in 2023.

Let's take a closer look at our financial performance in the fourth quarter.

Revenues of $4 9 billion increased 8% year over year and were up 13% on an organic basis.

Speaker 25: I'd also like to highlight an important announcement we recently made with the appointment of Dr. Taha Kashoot as our Chief Technology Officer.

The profit product revenues increased 13% versus the prior year led by imaging patient care solutions and ultrasound.

Speaker 26: Taha is leading our science and technology organization, as well as our efforts to drive growth through clinical research and the advancement of our digital and machine learning capabilities.

Reported services revenues declined 2%, mainly due to the unfavorable impact of foreign exchange, partially offset by could also in our cost services business.

Speaker 27: specifically our Edison digital health platform.

Speaker 28: He joins us with deep clinical, digital, and machine learning experience. Taha was most recently vice president of machine learning and chief medical officer at Amazon.

We are pleased with product growth in the quarter that will lead to additional services revenue.

Now I'd like to take that I'd like to talk about the actions, we are taking to increase margins through improving delivery price and cost.

Helmut Zottl: In addition, we're making progress with platforming initiatives that provide a more consistent user experience and drive personalization and cost reduction. Moving to ultrasound. Customer demand continues to be strong in both hospital and other care settings. Organic revenues were up 7% year over year, driven by price, improvements in sourcing, and fulfillment. Our customer-led innovation continues to drive healthy revenue growth, with strong performance in radiology and primary care, women's health, and cardiovascular. Our handheld business delivered strong growth in the quarter. We see continued traction with our differentiated products, including our recently launched Voluson Expert 22 premium ultrasound system for women's health, and the Vivid E95 Ultrasound Edition Advanced Cardiovascular Ultrasound. Both innovations are powered by advanced artificial intelligence tools to help improve workflow, efficiency, and productivity. Segment EBIT margin contracted 120 basis points year over year.

In addition, we're making progress with platforming initiatives that provide a more consistent user experience and drive personalization and cost reduction. Moving to ultrasound. Customer demand continues to be strong in both hospital and other care settings. Organic revenues were up 7% year over year, driven by price, improvements in sourcing, and fulfillment. Our customer-led innovation continues to drive healthy revenue growth, with strong performance in radiology and primary care, women's health, and cardiovascular. Our handheld business delivered strong growth in the quarter. We see continued traction with our differentiated products, including our recently launched Voluson Expert 22 premium ultrasound system for women's health, and the Vivid E95 Ultrasound Edition Advanced Cardiovascular Ultrasound. Both innovations are powered by advanced artificial intelligence tools to help improve workflow, efficiency, and productivity. Segment EBIT margin contracted 120 basis points year over year.

Speaker 29: Tahal also served as the FDA's first informatics leader, and he's joining the team at a perfect time as we accelerate investments in digital products and software.

As always delivering for our customers is our number one priority.

Speaker 30: As we invest in our business, we're continuing to make progress on enhancing our operating model to better serve customers to a simplified, more decentralized model.

It's improved our access to key components measured by the number of Red flag pods that indicate constraints and made good progress in the REIT qualifying at <unk>, signing and towards sourcing parts.

Speaker 31: And we're reducing bureaucracy in the organization, optimizing our geographic footprint, and implementing platforming initiatives across key product lines.

In fact, we've re qualified 7700 pods since Covid began and we are now seeing the lowest level of red flag pods since the first quarter of 2021.

Speaker 32: And with that, let me hand the call over to Helmut to walk through our financials and business segment performance. Helmut?

walk through our financials and business segment performance. Helmut? Thanks Pete.

We've also applied lean principles to improve our supply chain.

Let's take a closer look at our financial performance in the fourth quarter.

A great example.

Revenues of 4.9 billion increased 8% year over year and were up 13% on an organic basis.

Of how we apply lean across the organization, both our CP output initiatives this past quarter.

Reported product revenues increased 13% versus the prior year, led by imaging, patient care solutions and ultrasound.

We align factory output with customer installations to drive better end to end planning.

This resulted in an improved customer experience and early deliveries in the quarter.

Reported services revenues declined 2%, mainly due to the untenable impact of foreign exchange, partly offset by growth in our core services business.

We have achieved a positive sales price index for the third consecutive quarters now and this price equation of credit across each of our four segments in the fourth quarter.

We are pleased with product growth in the quarter that will lead to additional services revenue.

We are pleased with our progress in pricing and have good visibility on pricing our backlog.

Now, I'd like to talk about the actions we are taking to increase margins through improving delivery, price, and cost.

Helmut Zottl: In Q4, price improved, however, we experienced headwinds from inflation and planned investments. In line with our Lean philosophy, we are shifting from stocking inventory to make to order. This initiative is streamlining costs and reducing lead times. We are enabling this through redesign of parts, dual sourcing, and platforming. This is an initiative that we will be leveraging across the company, providing additional margin opportunity. Looking ahead, we are driving sustainable growth in ultrasound through continued NPI innovation, commercial excellence, and localization. The integration of BK Medical is also well on track. Let's move to Patient Care Solutions. PCS had a solid Q4 following a year of supply chain challenges, which improved as we exited 2022. Organic revenue was up 10% year-over-year, driven by volume and price improvement. Higher volumes was driven by supplier delivery and the launch of NPIs.

In Q4, price improved, however, we experienced headwinds from inflation and planned investments. In line with our Lean philosophy, we are shifting from stocking inventory to make to order. This initiative is streamlining costs and reducing lead times. We are enabling this through redesign of parts, dual sourcing, and platforming. This is an initiative that we will be leveraging across the company, providing additional margin opportunity. Looking ahead, we are driving sustainable growth in ultrasound through continued NPI innovation, commercial excellence, and localization. The integration of BK Medical is also well on track. Let's move to Patient Care Solutions. PCS had a solid Q4 following a year of supply chain challenges, which improved as we exited 2022. Organic revenue was up 10% year-over-year, driven by volume and price improvement. Higher volumes was driven by supplier delivery and the launch of NPIs.

We are driving variable cost productivity for logistics and material cost reductions. We are also reducing our real estate footprint and optimizing our commercial organization.

As always, delivering for our customers is our number one priority.

We've improved our access to key components measured by the number of red flag paths that indicate constraints and made good progress in the requalifying, redesigning and dual sourcing paths.

Yes.

Turning to imaging we.

We saw strong organic revenue growth up 18% year over year led by molecular imaging.

In fact, we've requalified 7,700 parts since COVID began, and we're now seeing the lowest level of red flag parts since the first quarter of 2021.

And factually.

Our customers remain focused on expansion of capacity and access to care.

Looking ahead, we expect imaging demand remained healthy supporting top line growth.

We've also applied lean principles to improve our supply chain.

Following strong revenue could also in the fourth quarter, we expect growth will normalize as we move into the second half of the year.

A great example.

of how we apply Lean across the organization was our CT output initiative this past quarter.

We align factory output with custom installations to drive better end-to-end planning.

Segment, EBIT margin declined 120 basis points year over year.

This resulted in an improved customer experience and earlier deliveries in the quarter.

We have realized improving volume and price, but this was offset by headwinds from inflation mix and planned investments.

We have achieved a positive sales price index for the third consecutive quarters now.

Our double digit investment in imaging R&D this quarter reflects our commitment to innovation and commercial growth.

And this price equation occurs across each of our four segments in the fourth quarter.

Helmut Zottl: Looking ahead, we expect fulfillment to improve as we ship our backlog. PCS margins increased 410 basis points compared to Q4 2021, with improving price and volume, as well as lower costs, partially offset by inflation. The cost favorability drove roughly half of the upside and was associated with one-time items. Sequentially, PCS margins increased significantly due to improving volume and price. We remain focused on innovation and commercial growth investments, with R&D investment up double digits in Q4. Key highlights from the quarter include continued momentum with patient monitoring, including Portrait Mobile and CARESCAPE Canvas in Europe. Moving to Pharmaceutical Diagnostics. Organic revenues were up 2% year-over-year, impacted by fewer procedures in China due to COVID, as well as normalization of US customer inventory. Margins were impacted due to inflationary pressures on raw materials and lower volumes.

Looking ahead, we expect fulfillment to improve as we ship our backlog. PCS margins increased 410 basis points compared to Q4 2021, with improving price and volume, as well as lower costs, partially offset by inflation. The cost favorability drove roughly half of the upside and was associated with one-time items. Sequentially, PCS margins increased significantly due to improving volume and price. We remain focused on innovation and commercial growth investments, with R&D investment up double digits in Q4. Key highlights from the quarter include continued momentum with patient monitoring, including Portrait Mobile and CARESCAPE Canvas in Europe. Moving to Pharmaceutical Diagnostics. Organic revenues were up 2% year-over-year, impacted by fewer procedures in China due to COVID, as well as normalization of US customer inventory. Margins were impacted due to inflationary pressures on raw materials and lower volumes.

During the quarter NPI driving growth included our evolution apex, CP with a scalable detector as well as <unk> with improved imaging and workflow.

We are pleased with our progress in pricing and have good visibility on pricing our backlog.

We are driving variable cost productivity through logistics and material cost reductions. We are also reducing our real estate footprint and optimizing our commercial organizations.

Globally, we've already seen success using deep learning from improved image quality and <unk> with <unk>.

Turning to imaging.

We are now very proud to be the first to extend those capabilities to Ami election, Petitti with presentation deep learning available insect select regions.

We saw strong organic revenue growth up 18% year-over-year led by molecular imaging, CT, MR and surgery.

Sequentially EBIT margin increased 120 basis points, driven by improved volume and price.

Our customers remain focused on expansion of capacity and access to care.

We expect margin expansion in 2023 to be driven by NPI.

Looking ahead, we expect imaging demand will remain healthy, supporting top-line growth.

Commercial execution.

Following strong revenue growth in the fourth quarter, we expect growth will normalize as we move into the second half of the year.

Apply chain productivity.

Platforming and digital.

Overall, we are investing to drive technology leadership and have the opportunity to increase market share with strategic Mti's digital and AI leadership and a focus on cap hearth ways.

Segment debit margin declined 120 basis points year over year.

We realized improving volume and price, but this was offset by headwinds from inflation, mix and planned investments.

In addition, we.

We're making progress is platform initiatives that provide a more consistent user experience and drive past standardization and cost reduction.

Our double digit investment in imaging R&D this quarter reflects our commitment to innovation and commercial growth.

Helmut Zottl: The team is executing on a pricing strategy that is built around the value we deliver for our customers and patients. We continue to monitor the COVID situation closely in China and expect elective procedures to pick up when COVID infections decline. In Q4, we introduced a new GE HealthCare CT Motion injector that will provide better product integration and an improved patient experience. Next, I'll walk through our cash performance for Q4 and full-year 2022. During the quarter, we generated $987 million of free cash flow, up year-over-year with improvement in supply chain and collections. With our focus on prioritizing patients and customers, our free cash flow declined for the full-year 2022, but as we enter 2023, we are well positioned to deliver on our backlog.

The team is executing on a pricing strategy that is built around the value we deliver for our customers and patients. We continue to monitor the COVID situation closely in China and expect elective procedures to pick up when COVID infections decline. In Q4, we introduced a new GE HealthCare CT Motion injector that will provide better product integration and an improved patient experience. Next, I'll walk through our cash performance for Q4 and full-year 2022. During the quarter, we generated $987 million of free cash flow, up year-over-year with improvement in supply chain and collections. With our focus on prioritizing patients and customers, our free cash flow declined for the full-year 2022, but as we enter 2023, we are well positioned to deliver on our backlog.

During the quarter, NPI's driving growth included our revolution APEX CT with a scalable detector, as well as SCT with improved imaging and workflow.

Moving to ultrasound.

<unk> customer demand continues to be strong in both hospitals and other care settings.

Organic revenues were up 7% year over year, driven by price improvements in sourcing and fulfillment.

Globally, we've already seen success using deep learning from improved image quality in MR with ARE Condi L.

Our customer led innovation continues to drive healthy revenue growth with strong performance in radiology and primary care women's health and cardiovascular.

We are now very proud to be the first to extend those capabilities to OmniLatch and PET-CT with precision deep learning available in cycle select regions.

And our handheld business delivered strong growth in the quarter.

Sequentially, EBIT margin increased 120 basis points during by improved volume and price.

We see continued traction with our differentiated products, including our recently launched Vodafone Express 22 premium ultrasound system for women's health and <unk> 95, Ultrasounds addition, advanced cardiovascular ultrasound.

We expect margin expansion in 2023 to be driven by NPIs.

commercial execution, supply chain productivity, platforming and digital.

Both innovations are powered by advanced artificial intelligence tools to help improve workflow efficiency and productivity.

Overall, we are investing to drive technology leadership and have the opportunity to increase market share with strategic MPIs, digital and AI leadership, and a focus on peer pathways.

Helmut Zottl: This is a robust and consistent cash flow generating business with a disciplined capital allocation strategy. We are committed to a strong investment grade rating and will employ a disciplined capital allocation framework. This will include paying down debt and evaluating accretive M&A that advances our precision care strategy. Our balance sheet is strong. As expected, post-spin, our day one cash balance was $1.8 billion. Day one leverage, excluding pension, was approximately 2.5 times, including, in line with our expectations. Let me now move to our 2023 financial outlook. For the full year 2023, we are reaffirming our guidance that was introduced on 10 January, calling for year-over-year organic revenue growth in the range of 5% to 7%. We expect stronger organic revenue growth in the first half of the year, with more normalized growth in the second half.

This is a robust and consistent cash flow generating business with a disciplined capital allocation strategy. We are committed to a strong investment grade rating and will employ a disciplined capital allocation framework. This will include paying down debt and evaluating accretive M&A that advances our precision care strategy. Our balance sheet is strong. As expected, post-spin, our day one cash balance was $1.8 billion. Day one leverage, excluding pension, was approximately 2.5 times, including, in line with our expectations. Let me now move to our 2023 financial outlook. For the full year 2023, we are reaffirming our guidance that was introduced on 10 January, calling for year-over-year organic revenue growth in the range of 5% to 7%. We expect stronger organic revenue growth in the first half of the year, with more normalized growth in the second half.

Segment, EBIT margin contracted 120 basis points year over year.

In the fourth quarter price improved however, we experienced headwinds from inflation and planned investments.

In addition, we're making progress with platforming initiatives that provide a more consistent user experience and drive path standardization and cost reduction.

In line with our lean philosophy, we are shifting from stocking inventory to make to order.

Moving to add the sound.

This unit this initiative is streamline costs and reducing lead times.

Customer demand continues to be strong in both hospital and other care settings.

Enabling this through redesign of pods dual sourcing and cloud platforming.

Organic revenues were up 7% year-over-year driven by price, improvement in sourcing and fulfillment.

This is an initiative that we will be leveraging across the company, providing additional margin opportunity.

Our customer-led innovation continues to drive healthy revenue growth with strong performance in radiology and primary care, women's health, and cardiovascular.

Looking ahead.

We are driving sustainable growth in ultrasound through continuous NPI innovation commercial excellence and localization.

And our handheld business delivered strong growth in the quarter.

The integration of BK medical is also well on track.

We see continuous traction with our differentiated products, including our recently launched Voluson XPRT22 premium ultrasound system for women's health and the Vivid E95 ultrasound edition advanced cardiovascular ultrasound.

Let's move to patient care solutions.

<unk> had a solid fourth quarter following a year of supply chain challenges, which improved as we exited 2020 tool.

Helmut Zottl: We continue to expect fully adjusted EBIT margin to be in the range of 15% to 15.5%, reflecting an expansion of 50 to 100 basis points over the 2022 standalone adjusted EBIT margin of 14.5%. This includes the impact of approximately $200 million of standalone costs. Margin expansion in 2023 will be back half weighted as transformation initiatives take hold. We expect 2023 adjusted EPS in the range of $3.60 to $3.75, reflecting a growth of 7% to 11%. This compares to 2022 standalone adjusted EPS of $3.38, and includes the impact of the standalone costs. We are assuming an adjusted tax rate of 23% to 25%. Free cash flow conversion is expected to be 85% or more for the full year.

We continue to expect fully adjusted EBIT margin to be in the range of 15% to 15.5%, reflecting an expansion of 50 to 100 basis points over the 2022 standalone adjusted EBIT margin of 14.5%. This includes the impact of approximately $200 million of standalone costs. Margin expansion in 2023 will be back half weighted as transformation initiatives take hold. We expect 2023 adjusted EPS in the range of $3.60 to $3.75, reflecting a growth of 7% to 11%. This compares to 2022 standalone adjusted EPS of $3.38, and includes the impact of the standalone costs. We are assuming an adjusted tax rate of 23% to 25%. Free cash flow conversion is expected to be 85% or more for the full year.

Organic revenue was up 10% year over year, driven by volume and price improvement.

Both innovations are powered by advanced artificial intelligence tools to help improve workflow, efficiency and productivity.

Higher volumes was driven by a supplier delivery and the launch of NPI.

Segment Abbott Marching contracted 120 basis points year over year.

Looking ahead, we expect fulfillment to improve as we shape our backlog.

In the fourth quarter, price improved. However, we experienced headwinds from inflation and planned investments.

Tcs margins increased 410 basis points compared to fourth quarter 'twenty one.

In line with our lean philosophy, we are shifting from stock inventory to make to order.

With improving price and volume as well as lower cost partially offset by inflation.

This initiative is streamlining costs and reducing lead times.

The cost favorability drove roughly half of the upside and also associated with onetime items.

We are enabling this through redesign of parts, dual sourcing and platforming.

<unk> margins increased significantly due to improved volume and price.

This is an initiative that we will be leveraging across the company, providing additional margin opportunity.

We remained focus on innovation and commercial growth investments with R&D investment up double digits in the fourth quarter.

Looking ahead...

We are driving sustainable growth in ultrasound through continuous NPI innovation, commercial excellence and localization.

Key highlights from the quarter include continued momentum with patient monitoring, including profit mobile and Cascade canvas in Europe .

The integration of BK Medical is also well on trend.

Moving to our pharmaceutical agnostics.

Helmut Zottl: Our cash flow outlook assumes that the legislation requiring R&D capitalization for tax purposes is repealed or deferred beyond 2023. The free cash flow impact of this legislation is approximately 10 points of free cash flow conversion for the year. Second half free cash flow will be substantially higher than the first half of the year, in line with typical cash seasonality, due to increased inventory, as well as interest, compensation, and benefits payments in the first half. Now, let me hand back to Pete.

Our cash flow outlook assumes that the legislation requiring R&D capitalization for tax purposes is repealed or deferred beyond 2023. The free cash flow impact of this legislation is approximately 10 points of free cash flow conversion for the year. Second half free cash flow will be substantially higher than the first half of the year, in line with typical cash seasonality, due to increased inventory, as well as interest, compensation, and benefits payments in the first half. Now, let me hand back to Pete.

Let's move to patient care solutions.

Organic revenues were up 2% year over year impacted by fewer procedures in China due to COVID-19 as well as normalization of U S customer inventory.

PCS had a solid fourth quarter following a year of supply chain challenges, which improved as we exited 2022.

Margins were impacted Q3 inflationary pressure on raw materials and lower volumes.

Organic revenue was up 10% year-over-year driven by volume and price improvement.

Higher volumes were driven by supplier delivery and the launch of NPIs.

The team is executing on a pricing strategy that is built around the value we deliver for our customers and patients.

Looking ahead, we expect fulfillment to improve as we ship our backlog.

We continue to monitor the COVID-19 situation closely in China, and expect elective procedures to peak up when Covid infections decline.

PCS margins increased 410 basis points compared to fourth quarter 21, with improving price and volume as well as lower cost partially offset by inflation.

Peter Arduini: Thanks, Helmut. Before we go to questions, I'd like to reiterate how we're executing against our long-term growth strategy. Our teams are well positioned to deliver on our 2023 commitments. We're investing in organic growth, as demonstrated by the introduction of over 40 new products at the RSNA event in November. And with workflow solutions enhanced by AI to help healthcare professionals and health systems overcome the top operational challenges they face today, while also improving outcomes for patients. We're deepening customer engagement across care pathways, including oncology and cardiology, and we've announced some exciting new products, collaborations, and investments that are changing the way healthcare is delivered. On the M&A front, we recently announced the agreement to acquire IMACTIS, an innovator in CT interventional guidance....

In the fourth quarter, we introduced a new GE healthcare CET motion injector that will provide better product integration and in earnings and an improved patient experience.

The cost favourability drove roughly half of the upside and was associated with one-time items.

Sequentially, PCS margins increased significantly due to improving volume and price.

Next I'll walk through our cash performance for fourth quarter and full year 2022.

We remain focused on innovation and commercial growth investments with R&D investment up double digits in the fourth quarter.

During the quarter, we generated $987 million of free cash flow up year over year with improvement in supply chain and collections.

Key highlights from the quarter include continued momentum with patient monitoring, including portrait mobile and Carescape Canvas in Europe .

With our focus on prioritizing patients and customers our fee cash flow decline for the full year 2022.

Moving to pharmaceutical diagnostics.

But as we enter 2023, we are well positioned to deliver on our backlog.

Organic revenues were up 2% year-over-year, impacted by fewer procedures in China due to COVID, as well as normalization of UAS customer inventory.

This is a robust and consistent cash flow generating business with a disciplined capital allocation strategy.

Peter Arduini: This acquisition, although small, is our first as an independent company, and is a great example of the type of transactions that we plan to pursue. They add innovative technology in fast-growing areas that enhances the breadth of capabilities we can deliver for customers. In imaging, we're very proud to announce SIGNA Experience, an MR platform that comes with an integrated set of solutions, including workflow capabilities, an intuitive user interface, and deep learning AI applications, such as AIR Recon DL, which has already reduced scan times for approximately five and a half million patients globally, and is increasing efficiency for clinicians. Globally, demand for minimally invasive surgical procedures continues to grow. In the US, for example, ambulatory surgical centers are performing more than half of all outpatient procedures, and to serve patients, our customers need efficient imaging capabilities.

This acquisition, although small, is our first as an independent company, and is a great example of the type of transactions that we plan to pursue. They add innovative technology in fast-growing areas that enhances the breadth of capabilities we can deliver for customers. In imaging, we're very proud to announce SIGNA Experience, an MR platform that comes with an integrated set of solutions, including workflow capabilities, an intuitive user interface, and deep learning AI applications, such as AIR Recon DL, which has already reduced scan times for approximately five and a half million patients globally, and is increasing efficiency for clinicians. Globally, demand for minimally invasive surgical procedures continues to grow. In the US, for example, ambulatory surgical centers are performing more than half of all outpatient procedures, and to serve patients, our customers need efficient imaging capabilities.

We are committed to a strong investment grade rating and we will employ a disciplined capital allocation framework.

Margins are impacted due to inflationary pressures on raw materials and lower volumes.

The team is executing on a pricing strategy that is built around the value we deliver for customers and patients.

This will include paying down debt and evaluating accretive M&A that advances our position cash strategy.

We continue to monitor the COVID situation closely in China and expect elective procedures to pick up when COVID infections begin.

Our balance sheet is strong.

As expected post spin our table on cash balance was $1 8 billion.

In the fourth quarter, we introduced a new GE Healthcare CT motion injector that will provide better product integration and an improved patient experience.

They are on leverage excluding pension was approximately two five times, including in line with our expectations.

Let me now move to our 2023 financial outlook.

Next.

I'll walk through our cash performance for fourth quarter and full year 2022.

For the full year 2023, we are reaffirming our guidance that was introduced on January 10th calling for year over year organic revenue growth in the range of 5% to 7%.

We expect stronger organic revenue growth in the first half of the year with more normalized growth in the second half.

Peter Arduini: As a leader in surgery imaging, which is a high growth and high margin business for us, we see increasing opportunities for our OEC 3D C-arms to provide precise 2D and 3D images interoperably for many of the clinical applications being done in ASCs, including spine, orthopedics, and pulmonary work. During Q4, we also announced a $80 million investment in one of our facilities in Norway to increase capacity for our contrast active pharmaceutical ingredient. In our PCS business, we're excited about our Portrait Mobile patient monitoring solution, currently available in Europe. This technology allows us to expand care into subacute therapy areas, giving providers the ability to monitor patients that aren't always monitored as thoroughly as they should be.

As a leader in surgery imaging, which is a high growth and high margin business for us, we see increasing opportunities for our OEC 3D C-arms to provide precise 2D and 3D images interoperably for many of the clinical applications being done in ASCs, including spine, orthopedics, and pulmonary work. During Q4, we also announced a $80 million investment in one of our facilities in Norway to increase capacity for our contrast active pharmaceutical ingredient. In our PCS business, we're excited about our Portrait Mobile patient monitoring solution, currently available in Europe. This technology allows us to expand care into subacute therapy areas, giving providers the ability to monitor patients that aren't always monitored as thoroughly as they should be.

We continue to expect full year adjusted EBIT margin to be in the range of 15% to 15, 5%.

Reflecting an expansion of 50 to 100 basis points over the 2022 Standalone adjusted EBIT margin of 14, 5%.

This includes the impact of approximately $200 million of Standalone costs.

Margin expansion in 2023, we will be back half weighted as transformation initiatives take hold.

We expect 2023 adjusted EPS in the range of $3 60 to $3 75.

Reflecting a growth of 7% to 11%.

This compares to 2022 Standalone adjusted EPS of $3 38.

And includes the impact of the Standalone costs.

Peter Arduini: In ultrasound, we're excited about the customer demand for our Vivid cardiac ultrasound portfolio, which again, is equipped with AI features that help improve consistency of assessing the heart muscle's function, and significantly reduce the time it takes to acquire those imaging measurements. And in digital, we continue to make progress with the development of our Edison Digital Health Platform to help solve customer challenges. We have several pilots underway at hospital systems in the US and Europe, and we expect that cloud-based or on-prem Edison Digital Health Platform will be a vendor-agnostic platform, aggregating data from multiple sources and enabling integrated care pathway management. Our goal is that customers will benefit from a wide range of AI applications developed by us and third parties to make better connected decisions, operate more efficiently, or better detect trends in populations.

In ultrasound, we're excited about the customer demand for our Vivid cardiac ultrasound portfolio, which again, is equipped with AI features that help improve consistency of assessing the heart muscle's function, and significantly reduce the time it takes to acquire those imaging measurements. And in digital, we continue to make progress with the development of our Edison Digital Health Platform to help solve customer challenges. We have several pilots underway at hospital systems in the US and Europe, and we expect that cloud-based or on-prem Edison Digital Health Platform will be a vendor-agnostic platform, aggregating data from multiple sources and enabling integrated care pathway management. Our goal is that customers will benefit from a wide range of AI applications developed by us and third parties to make better connected decisions, operate more efficiently, or better detect trends in populations.

We are assuming a tax and adjusted tax rate of 23% to 25%.

Free cash flow conversion is expected to be 85% or more for the full year.

Our cash flow outlook assumes that the legislation declining R&D capitalization for tax purposes is repealed or deferred beyond 2023.

The free cash flow impact of this legislation is approximately 10 points of free cash flow conversion for the year.

Second half free cash flow will be substantially higher than the first half of the year in line with typical cash seasonality due to increased inventory as well as interest and compensation and benefits payments in the first half.

Now, let me hand back to peak.

Thanks, So much before we go to questions I'd like to reiterate how we're executing against our long term growth strategy.

Peter Arduini: These are just a few of the examples of products and partnerships we've invested in to advance our capabilities in precision care. And so with that, we'd like to open up the call for questions.

These are just a few of the examples of products and partnerships we've invested in to advance our capabilities in precision care. And so with that, we'd like to open up the call for questions.

Our teams are well positioned to deliver on our 2023 commitments, we're investing in organic growth as demonstrated by the introduction of over 40, new products at the <unk> event in November and with workflow solutions enhanced by AI to help healthcare professionals and health systems overcome the top operational challenges.

Carolynne Borders: Thank you, Peter. I'd like to ask participants to please limit yourself to one question and one follow-up, so that we can take as many questions as possible during the one hour that we have allotted for the call. Michelle, can you please open the line?

They face today, while also improving outcomes for patients.

Operator: Thank you. Again, to ask a question, please press star one, one. If your question has been answered or you'd like to remove yourself from the queue, please press star one, one again. One moment for your questions. Our first question comes from Drew Ranieri with Morgan Stanley. Your line is open.

We're deepening customer engagement across the care pathways, including oncology and cardiology, and we've announced some exciting new products collaborations and investments that are changing the way healthcare is delivered.

On the M&A front, we recently announced the agreement to acquire <unk>, an innovator in Cte interventional guidance. This acquisition, although small is our first as an independent company and is a great example of the type of transactions that we plan to pursue innovative.

[Analyst] (Morgan Stanley): Hi, everyone.

Drew Ranieri: Hi, everyone.

Peter Arduini: Morning, Drew.

[Analyst] (Morgan Stanley): Thanks for taking the questions. Morning, morning, and congratulations to you and the GE HealthCare team on the spin-off, and Pete, welcome back to more earnings calls. Just maybe first to start on the macro environment. I think there's still some concerns that there will be a capital spending slowdown at some stage. Your results, I mean, you're pointing to ongoing demand across your portfolio, but maybe just help us kind of square what you're seeing from the demand side globally, maybe what product categories are getting probably the most interest, and do you think there's been any risk of pull forward of capital sales just over the past year or anything? I'll have a follow-up. Thanks.

Drew Ranieri: Thanks for taking the questions. Morning, morning, and congratulations to you and the GE HealthCare team on the spin-off, and Pete, welcome back to more earnings calls. Just maybe first to start on the macro environment. I think there's still some concerns that there will be a capital spending slowdown at some stage. Your results, I mean, you're pointing to ongoing demand across your portfolio, but maybe just help us kind of square what you're seeing from the demand side globally, maybe what product categories are getting probably the most interest, and do you think there's been any risk of pull forward of capital sales just over the past year or anything? I'll have a follow-up. Thanks.

Innovative technology in fast growing areas that enhances the breadth of capabilities, we can deliver for customers.

In imaging, we're very proud to announce cigna experience in MLR platform that was comes with an integrated set of solutions, including workflow capabilities and intuitive user interface and deep learning AI applications, such as <unk>, which has already reduced scan times for approximately $5 5 million patients.

Globally and is increasing efficiency for clinicians.

Globally demand for minimally invasive surgical procedures continues to grow in the U S. For example, ambulatory surgical centers are performing more than half of all outpatient procedures and to serve patients our customers need efficient imaging capabilities.

Peter Arduini: Thanks, Drew, for the question. Yeah, I'd just say, if I go around the world, start maybe in Europe, there's still robust demand at this point. I think, as we've talked about in the past within different audiences, that from different SIC funds and tenders to really drive incremental imaging capabilities post-COVID. And so we see that continuing here into the future. China's obviously been a topic in the news, and although COVID was challenging in Q4, there was quite a bit of investment that we saw going into imaging in particular and in ultrasound. And we believe, as you know, the market there works through some of the challenges with COVID in Q1, that there's just a lot of pent-up demand.

As a leader in surgery imaging, which is a high growth and high margin business for us, we see increasing opportunities for our OTC <unk> arms to provide precise <unk> and <unk> images inter operatively for many of the clinical applications being done in afcs, including spine orthopedics and pulmonary work.

During the fourth quarter, we also announced an $80 million investment in one of our facilities in Norway to increase capacity for our contrast active pharmaceutical ingredient.

In our Pts business, we're excited about our portrait mobile patient monitoring solutions currently available in Europe . This technology allows us to expand care into sub acute therapy areas, giving providers the ability to monitor patients that arent always monitor as thoroughly as they should be.

Peter Arduini: If you think about 2022 and even 2021, with some of the lockdowns, there's a lot of people that have a lot of procedures to be taken care of. And in the United States, you know, we were pleased to see with different customers that have reported, as well as customers that myself, Helmut, and the team have been talking to regularly, are seeing improving conditions. It doesn't mean that they're back to, say, 2019 levels, but it means that we're seeing improvements in labor costs. The demand or backlog, meaning the need for imaging procedures, both in our interventional, diagnostic, and ultrasound modalities, is still at a record high. So we look as we start the year, the demand's running strong.

If you think about 2022 and even 2021, with some of the lockdowns, there's a lot of people that have a lot of procedures to be taken care of. And in the United States, you know, we were pleased to see with different customers that have reported, as well as customers that myself, Helmut, and the team have been talking to regularly, are seeing improving conditions. It doesn't mean that they're back to, say, 2019 levels, but it means that we're seeing improvements in labor costs. The demand or backlog, meaning the need for imaging procedures, both in our interventional, diagnostic, and ultrasound modalities, is still at a record high. So we look as we start the year, the demand's running strong.

In ultrasound, we're excited about the customer demand for our vivid cardiac ultrasound portfolio, which again is equipped with AI features that help improve consistency of assessing the heart muscle function and significantly reduced the time it takes to acquire those imaging measurement and.

And in digital we continue to make progress with the development of our Edison Digital health platform to help solve customer challenges. We have several pilots underway at hospital systems in the U S and Europe , and we expect that cloud based or on Prem Edison Digital health platform will be a vendor agnostic platform.

Peter Arduini: I think part of the piece that we all keep an eye on is CapEx prioritization in the United States. I think all indications are that people are being prudent and prioritizing for sure. But many of the technologies that we offer tend to be prioritized to the higher end of the list. And what customers tell us is, in many cases, that added productivity to get patients diagnosed faster, sooner, get them healthier and out of the system, is one of the key, you know, attributes that we bring. So we're cautiously optimistic, but I'd say with our large backlog that we have starting the year, we feel good about the horizon that we see here over the next couple quarters.

I think part of the piece that we all keep an eye on is CapEx prioritization in the United States. I think all indications are that people are being prudent and prioritizing for sure. But many of the technologies that we offer tend to be prioritized to the higher end of the list. And what customers tell us is, in many cases, that added productivity to get patients diagnosed faster, sooner, get them healthier and out of the system, is one of the key, you know, attributes that we bring. So we're cautiously optimistic, but I'd say with our large backlog that we have starting the year, we feel good about the horizon that we see here over the next couple quarters.

Aggregating data from multiple sources and enabling integrated care pathway management. Our goal is that customers will benefit from a wide range of AI applications developed by us and third parties to make better connected decisions operate more efficiently or better detect trends in populations. These are just a few of the exam.

<unk> of products and partnerships, we've invested in to advance our capabilities in precision care and so with that we'd like to open up the call for questions.

Thank you Peter I would like to ask participants to please limit yourself to one question and one follow up so that we can take as many questions as possible during the one hour that we have for the call.

[Analyst] (Redburn): Got it. Thank you. Maybe one other question, just on the margin expansion, maybe more for Helmut, but can you maybe help us just bridge the 50 to 100 basis points of improvement for the year? Maybe just talk about, is this all really gross margin driven or on the leverage side? But just trying to get a better sense there, and maybe how your 5% to 7% organic growth guidance really will drive that margin expansion, and if there's any particular segments that are really going to be the primary beneficiaries. Thank you.

Drew Ranieri: Got it. Thank you. Maybe one other question, just on the margin expansion, maybe more for Helmut, but can you maybe help us just bridge the 50 to 100 basis points of improvement for the year? Maybe just talk about, is this all really gross margin driven or on the leverage side? But just trying to get a better sense there, and maybe how your 5% to 7% organic growth guidance really will drive that margin expansion, and if there's any particular segments that are really going to be the primary beneficiaries. Thank you.

Michelle can you please open the line.

Thank you.

Again to ask a question. Please press star one one if your question has been answered or you would like to remove yourself from the queue. Please press star one again.

One moment for your questions.

Our first question comes from drew Ranieri.

With Morgan Stanley Your line is open.

Hi, everyone.

Good morning.

Good morning, and congratulations to you on the energy health care team on the spinoff and welcome back to more earnings calls.

Helmut Zottl: Yeah, thank you, Drew. I think, so when we look at the overall margin expansion in the 50 to 100 basis points, there is a number of drivers, you know, in there. So clearly volume is a driver, you know, VCP, so variable cost productivity, you know, improvement in material costs, improvement in logistics cost, and also price is key driver. So those are really, I would say, those key elements that are driving them with the positive, you know, improvement on the margin side. If you look at the headwinds against that, we're still seeing material costs, you know, elevated, so especially material costs that are sitting on our balance sheet in our inventory currently.

Helmut Zodl: Yeah, thank you, Drew. I think, so when we look at the overall margin expansion in the 50 to 100 basis points, there is a number of drivers, you know, in there. So clearly volume is a driver, you know, VCP, so variable cost productivity, you know, improvement in material costs, improvement in logistics cost, and also price is key driver. So those are really, I would say, those key elements that are driving them with the positive, you know, improvement on the margin side. If you look at the headwinds against that, we're still seeing material costs, you know, elevated, so especially material costs that are sitting on our balance sheet in our inventory currently.

Just maybe first to start on the macro environment I think there's still some concerns that there will be a capital spending slowdown.

At some stage your results I mean, you're pointing to ongoing demand across your portfolio, but maybe just help us kind of.

Square, what youre seeing from the demand side.

Globally, maybe what product categories are getting probably the most interest and do you think theres been any risk of pull forward of capital sales just over the past year.

Alright anything follow up thanks.

Helmut Zottl: We also continue to invest into the into the business, both, you know, for our growth, but also what we are putting innovation investment in R&D into the business. So these are really the offsetting, you know, elements. So both of those elements, together are really driving our 50 to 100 basis point margin expansion. We are very focused on what is really in our control, which is price, VCP, and obviously volume execution. That's really how we look at the margin expansion for 2023. If I give you a little bit more color through on the four segments, obviously as you've seen, you know, in the fourth quarter, the imaging segment, you know, very strong, you know, with its growth.

We also continue to invest into the into the business, both, you know, for our growth, but also what we are putting innovation investment in R&D into the business. So these are really the offsetting, you know, elements. So both of those elements, together are really driving our 50 to 100 basis point margin expansion. We are very focused on what is really in our control, which is price, VCP, and obviously volume execution. That's really how we look at the margin expansion for 2023. If I give you a little bit more color through on the four segments, obviously as you've seen, you know, in the fourth quarter, the imaging segment, you know, very strong, you know, with its growth.

Thanks drew for the question, Yes, I would just say if I go around the world start maybe in Europe .

There is still robust demand at this point I think as we've talked about in the past with different audiences.

That from different sick funds in tenders to really drive.

Incremental imaging capabilities post COVID-19 and so we see that.

<unk> here into the into the future our China has obviously been a topic in the news and although Covid was challenging in Q4.

There was quite a bit of investment that we saw going into imaging in particular and in ultrasound and we believe as.

Helmut Zottl: We expect, you know, that growth as we, as we work, you know, through our backlog continue, especially, you know, for the first half. So there's gonna be more growth on the imaging side, but also all our other, you know, three segments, ultrasound, PCS, and PDX, we expect, you know, to grow in that range as we have laid out the 5% to 7% as we go forward. So it's a quite good balance, as we go into the new year.

We expect, you know, that growth as we, as we work, you know, through our backlog continue, especially, you know, for the first half. So there's gonna be more growth on the imaging side, but also all our other, you know, three segments, ultrasound, PCS, and PDX, we expect, you know, to grow in that range as we have laid out the 5% to 7% as we go forward. So it's a quite good balance, as we go into the new year.

The market there works through some of the challenges with Covid in Q1 that Theres just a lot of pent up demand. If you think about 2002 and even 'twenty one with some of the Lockdowns. There is a lot of people that have a lot of procedures to be taken care of and in the United States.

We were pleased to see with different customers that have reported as well as customers.

Operator: Our next question comes from Ed Ridley-Day with Redburn. Your line is open.

Self helmet and the team have been talking to regularly are seeing improving conditions. It doesn't mean that they are back to say 19 levels, but it means that we are seeing improvements in labor costs, the demand or backlog, meaning the need for imaging procedures, both in our interventional diagnostic.

[Analyst] (Redburn): Good morning.

Peter Arduini: Good morning.

[Analyst] (Redburn): Good morning. Thank you very much. And, I'd add my congratulations on your successful spin and your annual results. First question, for me would be actually around your Molecular Imaging business. This continues to drive growth in the wider imaging business. Could you help us better under-quantify the benefit you receive here, particularly what % of your imaging business does this represent, roughly? And also in Pharmaceutical Diagnostics, you have provided the market breakdown between contrast and molecular, but what % of Pharmaceutical Diagnostics is radiopharmaceuticals? It's a great opportunity, so it'd be great to have any color you can give on that. And just a quick follow-up on pricing. Could you give us an idea of the price, rough price increase you hope to push through for this year? Thank you.

Ed Ridley-Day: Good morning. Thank you very much. And, I'd add my congratulations on your successful spin and your annual results. First question, for me would be actually around your Molecular Imaging business. This continues to drive growth in the wider imaging business. Could you help us better under-quantify the benefit you receive here, particularly what % of your imaging business does this represent, roughly? And also in Pharmaceutical Diagnostics, you have provided the market breakdown between contrast and molecular, but what % of Pharmaceutical Diagnostics is radiopharmaceuticals? It's a great opportunity, so it'd be great to have any color you can give on that. And just a quick follow-up on pricing. Could you give us an idea of the price, rough price increase you hope to push through for this year? Thank you.

In ultrasound modalities is still at a at a record high and so we look as we start the year the demand is running strong.

I think part of the the piece that we all keep an eye on is capex prioritization in the United States.

I think all indications are that people are being prudent and prioritizing for sure but many of the technologies that we offer tend to be prioritized to the higher end of the list and what customers tell US is in many cases that added productivity to get patients diagnosed faster sooner get them healthier and out of the system is.

One of the key attributes that we bring so we're cautiously optimistic but I would say with our large backlog that we have starting the year.

Peter Arduini: Thanks, Ed, for the questions there. I'll start maybe a little bit with MI and frame it up, and then maybe Helmut, you can comment a little bit on price. You know, I would start first with saying, yeah, I think one of the really interesting things that we're excited about strategically is we're the only company out there that actually makes the fuels for Molecular Imaging, as well as has the devices that capture to create the images themselves.

We feel good about the horizon that we see here over the next couple of quarters.

Got it. Thank you maybe one other question just on the margin expansion, maybe more for help us but.

Can you maybe help US just bridge the 50 to 100 basis points of improvement for the year. Maybe just talk about is this all really gross margin driven or on the leverage side, but just trying to get a.

Peter Arduini: Why that's important is, you know, this rise of different technologies out there called theranostics, this combination of a therapy and a diagnostic together, and how you tune the device to the agent, whether it be in the neurosciences area, such as Parkinson's, or amyloid beta plaque imaging, or other parts of the body. There's a lot of, you know, longer term benefits we think will come that way. Our, in the agent business itself, MI agents are about 1/3 of volume, about 2/3 is contrast imaging agents used in the X-ray equipment. But we believe that's gonna be a growing area with, again, newer capabilities coming out of the pharma space that, we play a critical role in helping do the diagnostics. On the, device side itself, you know, we've got a great platform, a great team.

Why that's important is, you know, this rise of different technologies out there called theranostics, this combination of a therapy and a diagnostic together, and how you tune the device to the agent, whether it be in the neurosciences area, such as Parkinson's, or amyloid beta plaque imaging, or other parts of the body. There's a lot of, you know, longer term benefits we think will come that way. Our, in the agent business itself, MI agents are about 1/3 of volume, about 2/3 is contrast imaging agents used in the X-ray equipment. But we believe that's gonna be a growing area with, again, newer capabilities coming out of the pharma space that, we play a critical role in helping do the diagnostics. On the, device side itself, you know, we've got a great platform, a great team.

Better sense, there and maybe how your 5% to 7% organic growth guidance.

Really will drive that margin expansion and if there's any particular segments that are really going to be the primary beneficiaries. Thank you.

Yes. Thank you through I think so so when we look at the overall margin expansion in the 50 to 100 basis points as a number of drivers in there. So clearly volume is a driver in a visa piece of government cost productivity in our improvement in material cost improvement and logistics costs and also price.

ESI is key driver. So those are really I would say those key elements that are driving them. What's the positive improvement on the margin side. If you look at the <unk>.

Vincent against that we still are seeing material costs elevated so, especially material cost is sitting on our balance sheet in our in our inventory currently and we also continue to invest into the.

Peter Arduini: We do some outstanding work here in the United States, as well as in Israel on these devices. Probably one of the deeper expertise capabilities on different technologies, whether they be BGO or LSO, different types of PET CT detectors, as well as the CZT expertise we have within our MI devices. And combined between PET and MI, we think that this is gonna be a continuing growth area. It's still, at this point, compared to MR and CT, a more moderate sized business.

We do some outstanding work here in the United States, as well as in Israel on these devices. Probably one of the deeper expertise capabilities on different technologies, whether they be BGO or LSO, different types of PET CT detectors, as well as the CZT expertise we have within our MI devices. And combined between PET and MI, we think that this is gonna be a continuing growth area. It's still, at this point, compared to MR and CT, a more moderate sized business.

Into the business both in our for our growth, but also what we are putting innovation investment in R&D into the business. So these are really the offsetting element. So both of those elements together are really driving a 50 to 100 basis point margin expansion and we are very focused on what is really in our control which is priced with CP.

And obviously volume execution, that's really how we look at the at these margin expansion for 2023, if I give you a little bit more color through on.

Peter Arduini: But again, with the rise of these new technologies, and, you know, giving an example, if an agent comes out that needs this type of follow-up, you know, to actually assess either amyloid beta plaque or other capabilities, we believe, you know, our MI technologies, the MI technologies out in the industry will really play a key role in helping drive that diagnosis. And then down the road, can even play a larger role in the therapy process, either dose or delivery of agents. So Helmut, you may wanna comment a little bit on the pricing question.

But again, with the rise of these new technologies, and, you know, giving an example, if an agent comes out that needs this type of follow-up, you know, to actually assess either amyloid beta plaque or other capabilities, we believe, you know, our MI technologies, the MI technologies out in the industry will really play a key role in helping drive that diagnosis. And then down the road, can even play a larger role in the therapy process, either dose or delivery of agents. So Helmut, you may wanna comment a little bit on the pricing question.

On the on the four segments, obviously said <unk> in the fourth quarter. The imaging segment in a very strong with its growth we expect that growth SV as we've worked through our backlog continue, especially now for the first half so that's going to be more growth on the imaging side, but also all our other <unk>.

Three segments, our ultrasound PCF and pdx, we expecting it to grow in.

In that range as we have laid out the 5% to 7% as we go forward. So it's a quite good balance as we go in and tap into new year.

Helmut Zottl: Yeah, thanks, Pete. So Ed, on price, we're quite happy with the progress we've been making on price, you know, throughout the year. So we started really tracking, you know, price on orders, you know, last year. So we have both a management system that looks at the orders, but also looks at how much price we have in sales. And in sales, since the second quarter, we have price, you know, in our sales or in revenue. It started at the low single digits, it improved as it went, you know, through the third quarter, and we are now, you know, for some of our modalities in the mid-single digit level, what we are seeing on price. So we're quite happy about how we perform. And we also have good visibility on price for this in our backlog.

Helmut Zodl: Yeah, thanks, Pete. So Ed, on price, we're quite happy with the progress we've been making on price, you know, throughout the year. So we started really tracking, you know, price on orders, you know, last year. So we have both a management system that looks at the orders, but also looks at how much price we have in sales. And in sales, since the second quarter, we have price, you know, in our sales or in revenue. It started at the low single digits, it improved as it went, you know, through the third quarter, and we are now, you know, for some of our modalities in the mid-single digit level, what we are seeing on price. So we're quite happy about how we perform. And we also have good visibility on price for this in our backlog.

Our next question comes from Ed Ridley day with Redburn. Your line is open.

Good morning. Good morning, Thank you very much and I'll add my congratulations on your successful spin during April results.

First question for me would be.

Around your molecular imaging business is continues to drive growth.

In.

The wider imaging business.

Can you help us.

Quantify the benefit you receive and particularly what percentage of imaging business, which represents roughly and also in pharmaceutical diagnostics you have provided the market breakdown between controls to molecular but what percentage of pharmaceutical diagnostics is radiopharmaceuticals as great opportunities will be greater hubs.

Helmut Zottl: So, we already know what is going to happen and ship here over the next, you know, quarters, and how much price is in that, in that backlog.

So, we already know what is going to happen and ship here over the next, you know, quarters, and how much price is in that, in that backlog.

Carolynne Borders: Michelle, we'll take our next question.

Operator: Thank you. Our next question comes from Vijay Kumar with Evercore. Your line is open.

Any color you can give on that.

And just a quick follow up on pricing.

<unk>.

Gibson deal.

Vijay Kumar: Hey, guys, congratulations on a nice print here, and thanks for taking my question.

This rough price increase you would hope to pursue for this year. Thank you.

Peter Arduini: Thank you.

Vijay Kumar: Maybe my first question here on the guidance assumptions here. Pete, can you talk about any trends in cancellation rates or cadence that we need to be aware of? When you look at the five to seven, you know, what is pricing? How much of that five to seven do you have visibility, given the backlog and the book-to-bill ratios here?

Thanks, guys for the questions there I'll start maybe with a little bit with MRI and frame. It up and then maybe how much you can comment a little bit on on price.

I would start first was saying I think one of the really interesting things that we're excited about strategically.

As we were the only company out there that actually makes the fuels for molecular imaging as well as has the devices that capture to create.

Peter Arduini: Yeah, Vijay, look, good question. We have some actually quite good visibility at this point, you know, with carrying a little bit larger backlog than we normally do. One of the advantages of that is we actually have greater visibility out into the distance about what the deals look like, what the margin is on the deal, the timing thereof. And one of the things our operating teams in each of the segments have done a very nice job is actually speaking with customers and getting all the install-based products planned out as far as we can go, which, you know, is in many cases, a couple quarters out, which is longer than we have historically done. But we did that purposely just based on, you know, some of the questions within the macro environment.

The images themself why that's important is this rise of different technologies out there called thorough gnostics. This combination of a therapy in a diagnostic together and how you tune the the device to the agent whether it'd be in the neurosciences areas, such as Parkinson's or amyloid.

Beta plaque imaging or other parts body theres a lot of longer term benefits, we think will come that way.

In the agent business itself.

Agents are about a third of volume about two thirds is contrast imaging agents used in the actuary equipment, but we believe that's going to be a growing area with again newer capabilities coming out of the pharma space that.

Peter Arduini: And so that gave us, you know, more confidence, obviously, here about what customers want, when they want it, and we've got some pretty good visibility into that. Other businesses, such as ultrasound, that have more flow capabilities, you know, based on prospecting funnels and stuff, we have quite good visibility, as well. So, you know, if we look at that backlog, we know what the cost, the input costs are going into that. We know what the price is in the backlog. So again, for those deals, it's quite good. We clearly have orders coming into the system that will feed into that backlog. We know what our current pricing is, and we've also, you know, either taken some price increases or had some that would cut in.

And so that gave us, you know, more confidence, obviously, here about what customers want, when they want it, and we've got some pretty good visibility into that. Other businesses, such as ultrasound, that have more flow capabilities, you know, based on prospecting funnels and stuff, we have quite good visibility, as well. So, you know, if we look at that backlog, we know what the cost, the input costs are going into that. We know what the price is in the backlog. So again, for those deals, it's quite good. We clearly have orders coming into the system that will feed into that backlog. We know what our current pricing is, and we've also, you know, either taken some price increases or had some that would cut in.

We play a critical role in helping do the diagnostics on the device side itself.

Got a great platform a great team, we do some outstanding work here in the United States as well as in Israel on these devices, probably one of the deeper expertise capabilities on different technologies, whether they be biggio or lso different types of pet Cte detectors as well as the CCT expertise we have.

Within our <unk>.

<unk> devices and combined between pad and.

We think that this is going to be continuing growth area. It's still at this point compared to <unk>.

A more moderate sized business, but again with the rise of these new technologies and give you. An example of an agent comes out that need this type of follow up to actually a SaaS either amyloid beta plaque or other capabilities. We believe rmi technologies to MRI technologies out in the industry will will really.

Peter Arduini: Keep in mind, there's a couple different ways to think about price. Looking at your configurations and really optimizing them is something that, you know, we started last year, and I think that's of high value. Our new NPIs, we really focus on getting the right value for the customer and pricing it right the first time, which typically then aligns to making sure that we have the right gross margins associated with it. And then classic price increases on, on many of our products. So again, the combination of those gives us a pretty good view into how we see the year at this point, but probably more so a better lens on the first half.

Keep in mind, there's a couple different ways to think about price. Looking at your configurations and really optimizing them is something that, you know, we started last year, and I think that's of high value. Our new NPIs, we really focus on getting the right value for the customer and pricing it right the first time, which typically then aligns to making sure that we have the right gross margins associated with it. And then classic price increases on, on many of our products. So again, the combination of those gives us a pretty good view into how we see the year at this point, but probably more so a better lens on the first half.

Play a key role in helping drive that diagnosis and then down the road can even play a larger role in the therapy process, either dose or delivery of agents. So how much you may want to comment a little bit on the pricing question, yes, Thanks pizza add on on price.

We're quite happy with the progress we've been making making on price throughout the year. So we started really tracking in a price on all of us in the last year, because we have had both management system that looks at the orders, but also looks at how much price we have in sales and in sales since the second quarter, we have priced in our sales are in revenue.

Vijay Kumar: Understood. That, that's helpful. Maybe one follow-up for Helmut. You know, look at EPS guidance here, seven to eleven. Between your organic top line assumptions and margin expansion, I think operating profits should be growing close to double digits here. What are you assuming for FX and any below-the-line sensitivity here on interest expense or other items that we need to be aware of?

It started at the low single page eight it improved as it went through the third quarter and we are now in a fast some of our mortalities in the mid single digit level, what we're seeing on price. So we were quite happy about how we perform and we also have good visibility on price for this in our backlog. So we already know what is going to happen in ship here over the next two quarters.

Helmut Zottl: Yeah. So, Vijay, we have been obviously tightening up the range on the Adjusted EPS guide. So the $3.60 to $3.75, we believe is right in the middle when you look at the upper and lower end of the revenue and the margin expansion guide. So we wanted to tighten that range up. And, you know, to the assumption question, so there's about two and a half, you know, basis points of negative impact from FX, you know, assumed in those numbers, very little below the line. So that's really how you, how you should look at it.

Helmut Zodl: Yeah. So, Vijay, we have been obviously tightening up the range on the Adjusted EPS guide. So the $3.60 to $3.75, we believe is right in the middle when you look at the upper and lower end of the revenue and the margin expansion guide. So we wanted to tighten that range up. And, you know, to the assumption question, so there's about two and a half, you know, basis points of negative impact from FX, you know, assumed in those numbers, very little below the line. So that's really how you, how you should look at it.

And how much prices in depth in that backlog.

Michelle we'll take our next question.

Thank you. Our next question comes from Vijay Kumar with Evercore. Your line is open.

Hey, guys congratulations on a nice sprint here and thanks for taking my question.

Thank you my first question here on now on the guidance assumptions here.

Peter Arduini: Yeah, and I would just say, Vijay, one of the things is, you know, we've got, and we've talked about improving supply chain. But again, improving isn't back to, say, the good old days. You know, all of our input costs have some added cost to them. It's why we've put a lot of focus on variable cost productivity. We're carrying some inventory from spot buys and things that was at higher rates. And, you know, we're going to see much of that continue into 2023, but we have good visibility to it. And I think as we see how the economy plays out and how that plays out relative to inflation, you know, we'll have better insights about what we can do about it. But, you know, again, our first half visibility looks quite good at this point in time.

Peter can talk about any.

Trends in that cancellation rates or cadence that we need to be of error. When you look at that 5% to seven.

What is pricing how much of that five to seven do you have visibility given given the backlog.

Book to Bill ratios here.

Yeah Vijay look good question, we have some actually quite good visibility at this point.

With carrying a little bit larger backlog than we normally do and one of the advantages that is we actually have greater visibility out into the distance about what the deals look like what the margin is on the deal the timing thereof, and one of the things our operating teams in each of the segments have done a very nice job is actually speaking.

Peter Arduini: Again, we're optimistic that we're going to continue to see improvements throughout the year.

Again, we're optimistic that we're going to continue to see improvements throughout the year.

Vijay Kumar: That's helpful perspective. Thank you, guys.

With customers in getting all of the installed based products planned out as far as we can go which.

Helmut Zottl: Thank you.

Helmut Zodl: Thank you.

Operator: Thank you. Our next question comes from Larry Biegelsen with Wells Fargo. Your line is open.

As in many cases, a couple of quarters out.

Which is longer than we have historically done, but we did that purposely just based on.

Some of the.

Larry Biegelsen: Good morning.

Peter Arduini: Good morning, Larry.

Larry Biegelsen: Hey, Pete. Hi, Helmut. Thanks for taking the question. One on the top line, one on the margins. Pete, you talked about, you know, clearly, Q4 results were very strong, 18% in imaging. You talked about the backlog here. Is there any way to quantify this? I mean, is this somewhat of a catch-up, if you will, and what are your expectations for that for 2023? Clearly, you're growing, you know, well in excess of historical market growth. And I had one follow-up.

The questions within the macro environment, and so that gave us more confidence obviously here about what customers want when they want it and.

And we've got some pretty good visibility into that other businesses, such as ultrasound that have more flow capabilities.

Based on prospecting.

Funnels and stuff, we have quite good visibility as well. So if we look at if we look at our backlog we know what the cost of the input costs are going into that we have we know what the prices in the backlog. So again for those deals it's quite good.

Peter Arduini: ... Yeah, Larry, I think particular to imaging, we obviously, as well as us and pretty much everyone in other industries, with the install type products, had some pent-up demand. And I mean, that's part of our backlog, right? And we were able to deliver a higher percentage of that. That typically is more an MR, CT, PET CT, again, some of the bigger installation-based products. But it's affected, you know, the whole portfolio at some level. And so, you know, Helmut mentioned the words we focused on making sure that we leaned in on getting the parts that we needed at the right time. It had a little bit of an impact on our cash flow, but we had the components available to ship, which then resulted in the higher growth.

We clearly have orders coming into the system that will feed into that backlog. We know what our current pricing is and we are also either taken some price increases or had some that would cut in and keep in mind. There's a couple of different ways to think about price.

Looking at your configurations, and really optimizing them.

Is something that we started last year and I think thats of high value, our new NPI as we really focus on getting the right value for the customer and pricing. It right. The first time, which typically then aligns to making sure that we have the right gross margins associated with it.

Then classic price increases on many of our products. So again the combination of those gives us a pretty good view into how we see the year at this point, but probably more so a better lens on the first half.

Peter Arduini: And I think, you know, with that, we're going to see that into the first half. Now, we would expect that that will start moderating and get back to, you know, more classical historic growth rates. But what's interesting is you speak with customers; again, back on the list of their top capital buys are, in many cases, diagnostic imaging equipment. MR ranks up there high. We'd mentioned the OEC arms in our remarks. You know, anybody that's doing any type of surgical imaging in an outpatient center, that's the preferred device. So it's quite strong, but we are definitely running at a higher level, and our RPO or our backlog that we have is quite strong. And again, just to emphasize, we've got good visibility on that into 2023 and well into the year.

And I think, you know, with that, we're going to see that into the first half. Now, we would expect that that will start moderating and get back to, you know, more classical historic growth rates. But what's interesting is you speak with customers; again, back on the list of their top capital buys are, in many cases, diagnostic imaging equipment. MR ranks up there high. We'd mentioned the OEC arms in our remarks. You know, anybody that's doing any type of surgical imaging in an outpatient center, that's the preferred device. So it's quite strong, but we are definitely running at a higher level, and our RPO or our backlog that we have is quite strong. And again, just to emphasize, we've got good visibility on that into 2023 and well into the year.

Understood that's helpful and maybe one follow up for <unk>.

Look at the EPS guidance here 711.

Between your organic top line assumptions and margin expansion that thing operating profit should be growing close to double.

Double digits here.

Any what are you assuming for FX and any below the line sensitivity here on the interest expense or other items that we need to be aware of.

Yes, so Richard we have been obviously tightening up the range on the EPS guide so the $3 60 to $3, 75%. We believe is right in the middle when you look at the upper and lower end of the revenue and the margin expansion guide. So we wanted to tighten that range up.

Larry Biegelsen: Thank you. And Helmut, on well, sales and margin cadence, appreciate the color. Maybe if you could help calibrate us a little bit more, how much lower, you know, do you expect second half organic growth? Is it going to be below the 5% to 7%? And then margins, kind of how much lower in the first half do you still expect to be down year over year? Thanks for taking the question.

Toyota the assumption question for about two and a half into basis points of negative impact from FX assumed in those numbers were a little below the line. So thats really how you how you should look at that.

Yeah, and I would just say one of the things as we've got and we've talked about improving supply chain.

But again improving isn't back to say the good old days.

All of our input costs have some added cost to them Thats why we put a lot of focus on variable cost productivity.

Helmut Zottl: Yeah, Larry, so maybe I'll reiterate how we look at the overall guidance, you know, for the full year and the quarterly flow. So on revenue, we expect, you know, growth to be stronger in the first half, clearly, and that is driven by the backlog, and also how we have lined up really parts and inventory, you know, in the first half, you know, accordingly. But the good news is going to be that we still expect sequential growth, you know, into the second half. So typically, our Q3 and Q4 is higher than our Q1 and Q2, but growth rates we expect to be, you know, slightly lower than what we are seeing in the first half, you know, accordingly. So that's the side on the revenue.

Helmut Zodl: Yeah, Larry, so maybe I'll reiterate how we look at the overall guidance, you know, for the full year and the quarterly flow. So on revenue, we expect, you know, growth to be stronger in the first half, clearly, and that is driven by the backlog, and also how we have lined up really parts and inventory, you know, in the first half, you know, accordingly. But the good news is going to be that we still expect sequential growth, you know, into the second half. So typically, our Q3 and Q4 is higher than our Q1 and Q2, but growth rates we expect to be, you know, slightly lower than what we are seeing in the first half, you know, accordingly. So that's the side on the revenue.

We're carrying some inventory from spot buys and things that was at higher rates and we're going to see much of that continue into 'twenty three.

But we have good visibility to it and I think as we see how the economy.

Plays out and how that plays out relative to inflation.

We have better insights about what we can do about it but.

Again, our first half visibility looks quite good at this point in time and again, we're optimistic that we're going to continue to see improvements.

Improvements throughout the year.

That's helpful perspective, Thank you guys.

Helmut Zottl: On the margin side, you will see, I think, you know, more of the margin expansion in the second half, as we expect some of those, productivity initiatives, you know, to taking hold, especially around, you know, VCP, you know, and, and cost improvements on the gross margin side. And the reason for that is really because we still have, as I think Pete said that earlier, we still have, elevated cost that is sitting in our inventory on our balance sheet. And as we flush that, you know, inventory through, we will have, you know, lower margins in the first half, but then will improve, you know, into the second half.

On the margin side, you will see, I think, you know, more of the margin expansion in the second half, as we expect some of those, productivity initiatives, you know, to taking hold, especially around, you know, VCP, you know, and, and cost improvements on the gross margin side. And the reason for that is really because we still have, as I think Pete said that earlier, we still have, elevated cost that is sitting in our inventory on our balance sheet. And as we flush that, you know, inventory through, we will have, you know, lower margins in the first half, but then will improve, you know, into the second half.

Thank you.

<unk>.

Thank you.

Okay.

Our next question comes from Larry Nicholson with Wells Fargo. Your line is open.

Good morning, Larry.

Okay.

Amit.

For taking the question.

One on the top line what on.

The margins.

You talked about clearly Q4 results were very strong 18% in imaging you talked about the backlog here is there is there any way to quantify this as there I mean.

Helmut Zottl: We're already seeing this based on those red flag parts, of how much parts we have, how much parts we have to purchase at spot buys and so forth. So that's going to be the upside on the margins, and more of that in the second half. Maybe I'll comment on cash flow also, just to be clear on that also. So a very large piece of the cash flow, given our seasonality in our business, we expect to happen in the second half. Less cash is going to be generated in the first half because of the interest payments, because of some of the supplier payments that are bigger, you know, in the first half as well. So that's really how you should look at the quarterly flow for 2023.

We're already seeing this based on those red flag parts, of how much parts we have, how much parts we have to purchase at spot buys and so forth. So that's going to be the upside on the margins, and more of that in the second half. Maybe I'll comment on cash flow also, just to be clear on that also. So a very large piece of the cash flow, given our seasonality in our business, we expect to happen in the second half. Less cash is going to be generated in the first half because of the interest payments, because of some of the supplier payments that are bigger, you know, in the first half as well. So that's really how you should look at the quarterly flow for 2023.

Is this somewhat of a catch up if you will and what are your expectations for that for 'twenty, three clearly growing well in excess of historical market growth and I had one follow up.

Yes, Larry I think particular to imaging.

We obviously as well as us and pretty much everyone in other industries.

The install type products had some pent up demand and I mean, thats part of our backlog right and we were able to deliver a higher percentage of that that typically is more than <unk>.

Peter Arduini: Our next question comes from Veronika Dubajova with Citi. Your line is open.

Pat.

Again, some of the bigger installation based products, but it has affected the whole.

Veronika Dubajova: Hi, good morning, and thank you guys for taking my questions, and congratulations on the successful spin as well. Maybe just-

Portfolio at some level and so.

<unk> mentioned the words, we focused on making sure that we leaned in on getting the parts that we needed at the right time, it had a little bit of an impact on our cash flow, but we had the components available to ship, which then resulted in the higher growth and I think.

Peter Arduini: Thanks, Veronica.

Veronika Dubajova: You guys can talk a little bit about the competitive environment that you're seeing, and I'm thinking in particular in imaging and ultrasound. Curious if you're seeing any changes. You know, we, we saw one of your peers this morning cancel some historical orders, which they felt were at a lower price. You know, is that creating opportunities, or in general, are you seeing opportunities that are driven by the disruption that this one peer of yours has, has suffered? And maybe specifically, if you can comment on China and how the local strategy is playing out for you guys. Then I have one follow-up after that, but I appreciate this is a long question, so I'll let you answer that first.

That we're going to see that into into the first half now we would we would expect that that will start moderating and get back to more classical historic growth rates, but what's interesting is you speak with customers again back on the list of their top capital buys are in many cases diagnostic imaging.

<unk> ranks up their high we'd.

You had mentioned the <unk> arms in our remarks.

Peter Arduini: Yeah, Veronika, I would say, look, from an environment in the marketplace, you know, I would say a little bit just because of some of the dynamics here, that there's quite a bit of demand that's actually out in the marketplace, when you look at these backlogs of imaging procedures. And so, you know, all the different players, I think, at some level, are having some positive benefits of this market. I mean, again, the prioritization of the CapEx just doesn't apply to GE HealthCare, right? It applies to everybody. And so we're expecting that there's a reasonable, healthy amount of demand out there. And, you know, everyone at some level has had different experiences and challenges with their supply chain, so there is some similarities.

The body, that's doing any type of surgical imaging, an outpatient center. That's the preferred device. So it's quite strong, but we are definitely running at a higher level than our RP O. Our backlog that we have is is quite strong and again just to emphasize we've got good visibility on that into 'twenty, three and well into the year.

Thank you and helmet.

While sales and margin cadence I appreciate the color, maybe if you could help calibrate us a little bit more how much lower do you expect second half organic growth is it going to be below the 5% to 7% and their margins kind of how much how much lower in the first half do you still expect to be down.

Year over year, Thanks for taking my question.

Peter Arduini: At the same time, you know, we think because of the investments that we've made over the past few years, we have some products that are winning share, more so about the capabilities they bring to patients and customers than, you know, a situation where maybe one or two of our competitors are in. And so I mentioned molecular imaging, where we've got leadership positions. What we've done in MR with our image quality as well as productivity, our CT, surgery, what's come out with ultrasound, you know, that's how we're winning the day and, and in many cases, taking share in different marketplaces. I would say we are really being balanced about what we go after to make sure that we get the right margins and, and, and capability around.

At the same time, you know, we think because of the investments that we've made over the past few years, we have some products that are winning share, more so about the capabilities they bring to patients and customers than, you know, a situation where maybe one or two of our competitors are in. And so I mentioned molecular imaging, where we've got leadership positions. What we've done in MR with our image quality as well as productivity, our CT, surgery, what's come out with ultrasound, you know, that's how we're winning the day and, and in many cases, taking share in different marketplaces. I would say we are really being balanced about what we go after to make sure that we get the right margins and, and, and capability around.

So maybe I'll reiterate how we look at the overall guidance for the full year and quarterly flows on revenue, we expect growth to be stronger in the first half clearly and that is driven by the backlog could alter how we have lined up really Pos and inventory in the first half accordingly, but the good news.

Is going to be we still.

<unk> sequential growth in the into the second half. So typically our Q3 and Q4 is higher than our Q1 and Q2, but growth rates, we expect to be slightly lower than what we are seeing in the first half and accordingly. So that's the the side on the on the revenue.

On the margin side.

We'll see I think in a more fixed margin expansion in the second half as we expect some of those productivity initiatives, taking hold especially around <unk>.

Peter Arduini: So that's, that's, that's an important part of, of our overall strategy. I would say to your China question. Look, there's always been lots of local competitors, you know, in many of our modalities for 10 to 20 years, there's been, you know, 5x or 4x the amount of competition within China, for China, versus the rest of the world. And I think, as you know, we've been competing there for many, many years, manufacturing for over 30. So we have a pretty good handle on it. And with some of the stimulus funds the government put out, really, at the beginning of Q4, we've been seeing some robust demand for imaging equipment, in particular, both ultrasound and the whole spectrum of, the imaging portfolio.

So that's, that's, that's an important part of, of our overall strategy. I would say to your China question. Look, there's always been lots of local competitors, you know, in many of our modalities for 10 to 20 years, there's been, you know, 5x or 4x the amount of competition within China, for China, versus the rest of the world. And I think, as you know, we've been competing there for many, many years, manufacturing for over 30. So we have a pretty good handle on it. And with some of the stimulus funds the government put out, really, at the beginning of Q4, we've been seeing some robust demand for imaging equipment, in particular, both ultrasound and the whole spectrum of, the imaging portfolio.

And and cost improvements on the gross margin side and the reason for that is really because we still have I think as Pete said earlier, we still have <unk>.

Elevated costs that is sitting in our inventory on our balance sheet and as we flush that inventory through we will have in our lower margins in the first half that will improve into the second half and we're already seeing this based on both red flag parts of how much parts. We have how much parts, we have to purchase it at spot buys and so forth. So that's going to be decided on the March.

And some of that in the second half and maybe I'll comment on cash flow also just to be clear on that also so a very large piece of the cash flow given our seasonality in our business, we expect to happen in the second half less of cash.

Peter Arduini: And again, I think we're gonna see that continue into the beginning of next year. And so we've been able to be quite successful, we believe, in competing against, you know, both multinational as well as local competitors. We see ourselves, in many cases, as a local player in many of our modalities, again, because of how we actually design and make products in China for China. You had another question?

And again, I think we're gonna see that continue into the beginning of next year. And so we've been able to be quite successful, we believe, in competing against, you know, both multinational as well as local competitors. We see ourselves, in many cases, as a local player in many of our modalities, again, because of how we actually design and make products in China for China. You had another question?

It's going to be generated in the first half because of the interest payments because of some of the supplier payments that are bigger in the first half of <unk>. So that's really how you should look at the at the quarterly flow for 2023.

Our next question comes from Veronica David Joseph with Citi. Your line is open.

Hi, Good morning, and thank you guys for taking my questions and congratulations on the successful spin as well.

Veronika Dubajova: Yeah, I did, which was China specifically, if you can just remind us what proportion of your portfolio is certified as local now, and when might we hit 100%?

Okay.

You guys can talk a little bit about.

In this environment that youre seeing and I'm thinking in particular in imaging and ultrasound.

Helmut Zottl: Yeah. So Veronika, we have a very large components of our portfolio is localized, and I would say it's, you know, not close to a hundred percent, but, you know, not far off hundred percent. That's how I would answer the question for most of our modalities, and we continue to expand that on an ongoing basis. Because it's not only the localization of the manufacturing, but it's also the innovation in China. So having specific product that's really made for China, made in China, that's really how we look at it. So innovating for the China market and accordingly. So this is, you know, quite high percentages. The teams work very hard, and we have a long, as Pete said earlier, we have a long, you know, history in China. It's an important market for us.

Helmut Zodl: Yeah. So Veronika, we have a very large components of our portfolio is localized, and I would say it's, you know, not close to a hundred percent, but, you know, not far off hundred percent. That's how I would answer the question for most of our modalities, and we continue to expand that on an ongoing basis. Because it's not only the localization of the manufacturing, but it's also the innovation in China. So having specific product that's really made for China, made in China, that's really how we look at it. So innovating for the China market and accordingly. So this is, you know, quite high percentages. The teams work very hard, and we have a long, as Pete said earlier, we have a long, you know, history in China. It's an important market for us.

Im curious if youre seeing any changes.

We saw one of your peers. This morning, cancel some historic orders, which they felt.

We're at a lower price is that creating opportunities or in general are you seeing opportunities that are driven by the disruption that this one peer of yours has has suffered.

And maybe specifically if you can comment on China and how the local strategy is playing out I said I have one follow up after that but I. Appreciate this is a long question. So I'll, let you answer that first.

Yes, Brian I would say look from a from an environment in the marketplace.

Helmut Zottl: Our brand is very well recognized, which we are proud of, and we are continuing to innovate, you know, for customers in China.

Our brand is very well recognized, which we are proud of, and we are continuing to innovate, you know, for customers in China.

I would say a little bit just because of some of the dynamics here that there is quite a bit of demand thats actually out in the marketplace.

Peter Arduini: I would just to put a finer point on it, Frank. I mean, for what we have said is our operating plan for 2023, we have all of that localized and feel quite good about it. You know, as Helmut said, as we bring new products out, one of the big question is: how much are you gonna localize versus not? But for what we need to compete, we're in a very good position with localized components and that type of recognition that's needed in certain types of tenders or constructs to compete.

When you look at these backlogs.

Imaging procedures and so.

The all of all of the different players I think at some level are having some positive benefits of this market I mean again, the prioritization of the Capex.

This doesn't apply to GE healthcare REIT it applies to everybody and so were expecting that there is a reasonable healthy amount of of demand out there and everyone. At some level has had different experiences and challenges with their supply chain. So there is some similarities at the same time, we think because of the investments that we've made over the <unk>.

Operator: Our next question comes from Anthony Petrone with Mizuho. Your line is open.

Peter Arduini: Hi, Anthony.

Helmut Zottl: Morning, Anthony.

Helmut Zodl: Morning, Anthony.

Past few years, we have some products that are winning share more so about the capabilities they bring to patients and customers then.

Anthony Petrone: Hi. Hi, Pete. Hi, Helmut. Congratulations on, on the spin and a great, initial, quarter out of the gate here. So congratulations to the team. So maybe a little bit on, on new product introductions, NPIs, and, you know, that is certainly a contributor here. So in the, the +13% overall, I guess, what percent of that actually came from new products? And then when we think about the backlog, you know, what is embedded in there for new products? What percentage of the backlog is gonna flow through, with newer systems that are recently introduced, let's say, over the last 12 to 18 months? And I'll have one quick follow-up on capital allocation.

A situation, where maybe one or two of our competitors are in and so ive mentioned molecular imaging, where we've got leadership positions what we've done in <unk>.

With our image quality as well as productivity RCT surgery, what's come out with ultrasound.

That's how we're winning the day and in many cases, taking share in different marketplaces, I would say, we are really being balanced about what we go after to make sure that we get the right margins and capability.

Around so that's that's that's an important part of our overall strategy I would say to your China question.

Peter Arduini: Yeah, Anthony, I'll make some comments, and Helmut, feel free to jump in. I think, again, in this business, having new products that bring, you know, solutions that solve some of the challenges for customers, in many cases, productivity, products that help deal with some of the labor challenges or expertise, and then, you know, solving big issues for patients. We've been quite fortunate with a lot of our launches recently, again, in some of the classic modalities, MR, CT. We mentioned about the PET system that has integrated AI on it. All of those have played a key role, I think, in the fourth quarter. You know, we were in the upper twenties, high twenties or so, relative to vitality rate on new products that have been recently launched.

Look there's always been lots of local competitors.

Many of our modalities for 10 to 20 years Theres been.

<unk> the amount of competition within China for China versus the rest of the world and I think as you know we've been competing there for many many years manufacturing for over 30.

So we have a pretty good handle on it and with some of the stimulus funds that were the government put out really at the beginning of Q4, we've been seeing some robust demand for imaging equipment in particular, both ultrasound and the whole spectrum of.

The imaging portfolio and again I think we're going to see that continue into the beginning of next year and so we've been able to be quite successful we believe in competing against both multinational as as well as local competitors, we see ourselves in many cases as local as the local player in many of our modem.

Peter Arduini: You know, my metric typically is, if you know you're above 20% in that range, that's a very good vitality metric. But we're closer to 30% within new products that are out there. I think there's quite a bit of demand, as we talked about, for certain products in outpatient centers, and there's still quite a bit of demand in updating, you know, on some levels, an older fleet within the acute hospitals around the world. Helmut, you want to add a few things?

You know, my metric typically is, if you know you're above 20% in that range, that's a very good vitality metric. But we're closer to 30% within new products that are out there. I think there's quite a bit of demand, as we talked about, for certain products in outpatient centers, and there's still quite a bit of demand in updating, you know, on some levels, an older fleet within the acute hospitals around the world. Helmut, you want to add a few things?

<unk> again, because of how we actually design and make products in China for China.

You had another question.

Yes, I did.

China, specifically, if you can just remind us what proportion of your portfolio with certified as local now.

Helmut Zottl: Yeah. I would just add. I think as Pete said, so the innovation and the new products are happening really across the portfolio. And I just would call out, it's happening both on the device, and I talked about a couple of those innovation in my remarks, but it's also happening on the digital side. So a lot of AI and machine learning that happens on the device accordingly, which is really, you know, a different way of introducing an NPI. So there's a lot of, you know, time spent, you know, on that by the team, which really helps clinicians significantly, both get more productive, but also have better patient outcomes.

Helmut Zodl: Yeah. I would just add. I think as Pete said, so the innovation and the new products are happening really across the portfolio. And I just would call out, it's happening both on the device, and I talked about a couple of those innovation in my remarks, but it's also happening on the digital side. So a lot of AI and machine learning that happens on the device accordingly, which is really, you know, a different way of introducing an NPI. So there's a lot of, you know, time spent, you know, on that by the team, which really helps clinicians significantly, both get more productive, but also have better patient outcomes.

And when might be 100%.

Yeah.

Not only can we have a very large components of our portfolio is localized and that would say it's.

Not close to 100%, but not far off 100%. That's how we would answer the question for most of our modalities and we continue to expand that on an ongoing basis, because it's totally the localization of the manufacturing, but it's also the innovation in China's having specific product that's really made for China made in China, That's really how we look at it so innovating.

For the China market. The accordingly. So this is quite high percentages. The teams worked very hard and we have a longest pizza daily we have a long history in China, It's an important market for us our brand is very well recognized which we are proud of and we are continuing to innovate in our core customers in China.

Peter Arduini: Yeah, and the last part, Anthony, is, I think from a service standpoint, you know, as we sell these more highly sophisticated products into the installed base, twelve months out, you know, the probability of capturing that for a service contract because of the sophistication of the product and, and really the limited amount of other folks that can provide the type of services needed for one of these advanced products, will then become more recurring revenue growth down the road. And so, you know, that type of capture rate involved with leading products, it's an important part of our equation on growth.

Just to put a finer point of ranking I mean for what we have said is our operating plan for 2003, we have all of that are localized and feel quite good about it as Tom said as we bring new products out one of the Big question is how much youre going to localize versus not but for what we need to compete we're in a very good position with localized.

<unk> components and.

That type of recognition thats needed in certain types of tenders or construct to compete.

Anthony Petrone: Very helpful. Quickly on capital allocation, you know, it's been dynamic out of the gate here. You did the tuck-in with IMACTIS.

[Company Representative] (GE HealthCare Technologies): ... we also had the debt recapitalization with the spin. And of course, you're doing internal investments with contrast, expanded the plant last year. So maybe just high level comments on capital allocation when we think of internal investment, the debt service out of the gate here, post spin, tuck in M&A, and then return to free cash holders. Again, congratulations. Thanks.

... we also had the debt recapitalization with the spin. And of course, you're doing internal investments with contrast, expanded the plant last year. So maybe just high level comments on capital allocation when we think of internal investment, the debt service out of the gate here, post spin, tuck in M&A, and then return to free cash holders. Again, congratulations. Thanks.

Our next question comes from Anthony Petrone with Mizuho. Your line is open.

Hi, Anthony good morning anti <unk>.

Hi, Pete Hi element congratulations on the spin and a great initial quarter advocate here so.

So congratulations to the team so maybe a little bit on on new product introductions NPI.

That is certainly a contributor here so in the the plus 13% overall I guess what percent of that.

Helmut Zottl: Yeah, thanks. Yeah, thanks, Anthony. So, the way we look at our capital locations are first and foremost, we're very happy with our strong investment grade ratings we received last year. This is important for us, you know, access to capital, but it's also equally important for our customers. I mean, Pete just talked about long-term services contracts. People want a strong, you know, financial partner that they know that's gonna be with them for, you know, many years, sometimes decades on it. So this is, you know, first and foremost, very important. Obviously, investing in the business is a key priority. We increased our R&D investment substantially in 2022. You know, it was up, you know, more than $1 billion that we spend on R&D now.

Helmut Zodl: Yeah, thanks. Yeah, thanks, Anthony. So, the way we look at our capital locations are first and foremost, we're very happy with our strong investment grade ratings we received last year. This is important for us, you know, access to capital, but it's also equally important for our customers. I mean, Pete just talked about long-term services contracts. People want a strong, you know, financial partner that they know that's gonna be with them for, you know, many years, sometimes decades on it. So this is, you know, first and foremost, very important. Obviously, investing in the business is a key priority. We increased our R&D investment substantially in 2022. You know, it was up, you know, more than $1 billion that we spend on R&D now.

It actually came from new products and then when we think about the backlog what is embedded in there for new products what percentage of the backlog is going to flow through.

With newer systems that are recently introduced let's say over the last 12 to 18 months and I have one quick follow up on capital allocation.

Yes Anthony.

I'll make some comments and <unk> feel free to jump in I think again in this business having.

New products that bring.

Helmut Zottl: And going forward, we expect that to, you know, really grow with the revenue. But when you then look at the rest of the capital allocation, obviously, this is a strong cash generating business. I'm talking about 85% or more for the cash flow conversion, and we will use and deploy that cash to continue to invest, you know, organically into the business, but also out of the free cash flow in organic and inorganic investment. Emarkets was one example.

And going forward, we expect that to, you know, really grow with the revenue. But when you then look at the rest of the capital allocation, obviously, this is a strong cash generating business. I'm talking about 85% or more for the cash flow conversion, and we will use and deploy that cash to continue to invest, you know, organically into the business, but also out of the free cash flow in organic and inorganic investment. Emarkets was one example.

Solutions that solve some of the challenges for customers in many case productivity.

Alex that help deal with some of the labor challenges our expertise and then solving big issues for for patients we've been quite fortunate with a lot of our launches recently again and some of the classic modalities MRC Chi.

We mentioned about the pet system that has integrated AI on it all of those have played a key role I think in the fourth quarter we were in.

Helmut Zottl: And Pete and I spent a lot of time with our M&A team to look at opportunities, because I think it's important for us to see what is out there, and make sure that we have, you know, good transparency and visibility, and then make decisions that are gonna be very disciplined, you know, for such acquisitions, you know, if they fit into our portfolio, and they are accretive both at the top line growth but also from a profitability perspective.

And Pete and I spent a lot of time with our M&A team to look at opportunities, because I think it's important for us to see what is out there, and make sure that we have, you know, good transparency and visibility, and then make decisions that are gonna be very disciplined, you know, for such acquisitions, you know, if they fit into our portfolio, and they are accretive both at the top line growth but also from a profitability perspective.

In the upper twenties high twenty's or so relative to vitality rate on new products that have been recently launched.

My metric typically is if you're above 20% in that range. That's a very good vitality metric.

Then you were closer to 30% within new products that are out there I think there's quite a bit of demand as we talked about for certain products and outpatient centers.

Operator: Our next question comes from Ryan Zimmerman with BTIG. Your line is open.

And theres still quite a bit of demand in updating some.

[Analyst] (BTIG): Hey, thanks for taking the questions and echo everyone else's sentiments on the first quarter here. So just wanna ask about two metrics that you're giving to the street, and one is the book-to-bill ratio. I know there's been a lot of questions on it, but you know, would appreciate some historical context in terms of how to think about that one point zero seven ratio, and how to think about it on a go-forward basis. And if you could give us any quantitative perspective from prior quarters on the book-to-bill ratio and just how to think about that. And similarly, in that vein, and I'll ask my follow-up, is there's about 10 billion in remaining performance obligations, at least as of the filings.

Ryan Zimmerman: Hey, thanks for taking the questions and echo everyone else's sentiments on the first quarter here. So just wanna ask about two metrics that you're giving to the street, and one is the book-to-bill ratio. I know there's been a lot of questions on it, but you know, would appreciate some historical context in terms of how to think about that one point zero seven ratio, and how to think about it on a go-forward basis. And if you could give us any quantitative perspective from prior quarters on the book-to-bill ratio and just how to think about that. And similarly, in that vein, and I'll ask my follow-up, is there's about 10 billion in remaining performance obligations, at least as of the filings.

Some levels an older fleet within the acute hospitals.

Around the world how much you want to add I would just averaged just add I think as Pete said, so the innovation and the new products are happening really across the portfolio and I just would call out it's happening both on the device and I talked about a couple of those innovation and in my remarks, but it's also happening on the digital side, So a lot of AI and machine.

In learning that happens on the device accordingly, which is really a different way of introducing an NPI. So theres a lot of time spent on that by the team, which really helps clinics.

Clinicians significantly both get more productive, but also have better patient outcomes.

[Analyst] (BTIG): And so just if you can help me, elaborate on the length of those obligations, how far those extend out, how those are realized over the coming quarters, and then how to think about that $10 billion on a go-forward basis. Is that kind of, you know, the par level to think about GE HealthCare as, as we think about, going forward? And if you'll be giving out these kind of metrics going forward. Thank you.

Ryan Zimmerman: And so just if you can help me, elaborate on the length of those obligations, how far those extend out, how those are realized over the coming quarters, and then how to think about that $10 billion on a go-forward basis. Is that kind of, you know, the par level to think about GE HealthCare as, as we think about, going forward? And if you'll be giving out these kind of metrics going forward. Thank you.

Yes, and the last part Anthony is I think from a service standpoint, as we sell these more highly sophisticated products into the installed base 12 months out.

The probability of capturing that for a service contract because of the sophistication of the product in and really the a limited amount of other folks that can provide.

Helmut Zottl: Yeah. So, Ryan, I think to the RPO, so we feel good about the Q4 in a book-to-bill ratio of, you know, 1.07. And this really, I think, you know, demonstrated that the markets, you know, are strong. The book-to-bill, the way how we define it, is really, I think, you know, a quite simple calculation across the whole portfolio. And you mustn't forget, we have quite a large services business, you know, in this as well, where book-to-bill is 1. Also, the PDX business, you know, for us, has a book-to-bill of 1.

Helmut Zodl: Yeah. So, Ryan, I think to the RPO, so we feel good about the Q4 in a book-to-bill ratio of, you know, 1.07. And this really, I think, you know, demonstrated that the markets, you know, are strong. The book-to-bill, the way how we define it, is really, I think, you know, a quite simple calculation across the whole portfolio. And you mustn't forget, we have quite a large services business, you know, in this as well, where book-to-bill is 1. Also, the PDX business, you know, for us, has a book-to-bill of 1.

Provide the type of services needed for one of these advanced products will then become more reoccurring revenue growth down the road and so that type of capture rate involved with leading products. It's an important part of our equation on growth.

Very helpful and quickly on capital allocation, it's been dynamic out of the gate here you did to tuck in with Imac. This we also had the debt recapitalization with the spin and.

Helmut Zottl: So when we look at across the portfolio, you will see book-to-bill is actually higher in our imaging, you know, products, where we have, obviously from, you know, taking the order until shipment, you know, takes a longer time. And we're quite, you know, comfortable with the backlog. Historically, that book-to-bill, I would say, has been running, you know, in similar ranges. It would have been, you know, up, you know, above the 110 level at certain quarters, if we look at historically, but it's running at a, at a very solid basis at, at this stage. As it relates to our RPO, the RPO, as you mentioned, is a, is a big amount, that we have, you know, disclosed, and, and we're quite happy with the backlog.

So when we look at across the portfolio, you will see book-to-bill is actually higher in our imaging, you know, products, where we have, obviously from, you know, taking the order until shipment, you know, takes a longer time. And we're quite, you know, comfortable with the backlog. Historically, that book-to-bill, I would say, has been running, you know, in similar ranges. It would have been, you know, up, you know, above the 110 level at certain quarters, if we look at historically, but it's running at a, at a very solid basis at, at this stage. As it relates to our RPO, the RPO, as you mentioned, is a, is a big amount, that we have, you know, disclosed, and, and we're quite happy with the backlog.

And of course, Youre doing internal investments with contrast.

Expanded the plant last year, so maybe just high level comments on capital allocation, when we think of internal investment.

Debt service out of the gate here post spin.

Tuck in M&A, and then return to free cash holders again congratulations thanks.

Thanks, Yes, thanks, Anthony So the way we look at our capital locations have first and foremost we are very happy with our strong investment grade ratings. We received last year. This is important for us and our access to capital, but it is also equally important for our customers I mean, Pete just talked about long term service contracts people want their strong.

Helmut Zottl: The RPO, the way it's defined, I wanna be also maybe clear on, it's defined as backlog that is non-cancellable. So we also have backlog that is cancellable, where we see very, very little, very few cancellations, you know, from our customers because they're committed, you know, to the product. That's really how we look at that RPO, and we're exiting the year at a very strong position, both on the RPO side as well as the total backlog. Just to be clear, the RPO, it is $14 billion. I don't know if that $10 billion number you quoted came from, but it is $14 billion, you know, at the end of 2022.

The RPO, the way it's defined, I wanna be also maybe clear on, it's defined as backlog that is non-cancellable. So we also have backlog that is cancellable, where we see very, very little, very few cancellations, you know, from our customers because they're committed, you know, to the product. That's really how we look at that RPO, and we're exiting the year at a very strong position, both on the RPO side as well as the total backlog. Just to be clear, the RPO, it is $14 billion. I don't know if that $10 billion number you quoted came from, but it is $14 billion, you know, at the end of 2022.

Financial partner that they know there's going to be with them for many years, sometimes decades on it so thats first and foremost very important obviously investing in the businesses is a key priority we increased our R&D investment substantially in 2022 enables up more than $1 billion that we spend on R&D now and going forward, we expect that to.

Really good always that risk.

Revenue, but when it and look at the rest of the capital allocation. Obviously this is a strong cash generating business I'm talking about 85% or more free cash flow conversion and we will use and deploy that cash.

[Analyst] (BTIG): Thanks, Albert. Thanks for taking the questions.

Ryan Zimmerman: Thanks, Albert. Thanks for taking the questions.

Helmut Zottl: Thank you.

Helmut Zodl: Thank you.

We'll continue to invest organically into the business, but also out of the free cash flow in organic and inorganic investment in <unk> was one example.

[Company Representative] (GE HealthCare Technologies): Thanks, Ryan.

Peter Arduini: Thanks, Ryan.

Operator: Thank you. Our next question comes from Jason Bednar with Piper Sandler. Your line is open.

Pete and I spend a lot of time with our M&A team to look at opportunities because I think it's important for us to see what is out there.

Jason Bednar: Hey, good morning, everybody, and again, I'll echo the congratulations here on the quarter and the guide and the spin and everything. I do want to, you know, touch here on China and build on some of the discussions from prior questions. I think most acknowledge there's some level of kind of demand in that market. I know you've referenced it, Pete. You know, it might be tough to call right now, but how do you see the China market unfolding here for GE HealthCare in 2023? And really, as we move through the year, if there's any cadence you'd like us to think about, and then maybe if you could speak to what you've embedded in the guide for China this year.

And make sure that we have seen a good transparency and visibility and then make decisions that are going to be very disciplined in our four such acquisitions, if they fit into our portfolio NTIA accretive both at the topline growth, but also from them from a profitability perspective.

Our next question comes from Ryan Zimmerman with <unk>. Your line is open.

Hey, Thanks for taking the questions and echo everyone else's sentiments on the first quarter here So I.

Just wanted to ask about.

Two metrics that youre, giving to the street and what is the book to Bill ratio I know, there's been a lot of questions on it but.

[Company Representative] (GE HealthCare Technologies): Yeah, Jason, I think. Look, I think, you know, China's. It's obviously tricky to fully estimate how things will play out. I mean, we're cautiously optimistic, but again, if you pull the lens back, you look at the market, you take a look at how, in many cases, procedures have been, you know, suppressed over the last 18 months, at least, potentially even 24 months.

Peter Arduini: Yeah, Jason, I think. Look, I think, you know, China's. It's obviously tricky to fully estimate how things will play out. I mean, we're cautiously optimistic, but again, if you pull the lens back, you look at the market, you take a look at how, in many cases, procedures have been, you know, suppressed over the last 18 months, at least, potentially even 24 months.

I would appreciate some historical context in terms of hottest thinking about that 107 ratio.

And how to think about it on a go forward basis.

Give us any quantitative perspective from prior quarters on the book to Bill ratio in and just how to think about that and similarly in that vein and I'll ask my follow up is just about $10 billion in remaining performance obligations at least as of the filings and so just if you can elaborate on the length of those obligations.

Peter Arduini: ... things are clearly opening up. And yes, there's challenges within the hospitals now with COVID patients and such. But, you know, if we think of our own facilities, that we've been able to keep running through Q4 when COVID levels were up 60, 70% in the environment, we were able to do that with learnings we had from how to run it in the first half of 2022. But we're now seeing, you know, a lot of those rates, particularly in the bigger cities, where a lot of the business is transacted, to drop off quite a bit. And so our estimates would be, you know, Q1, I think, is going to be a little bit choppy based on the type of products.

... things are clearly opening up. And yes, there's challenges within the hospitals now with COVID patients and such. But, you know, if we think of our own facilities, that we've been able to keep running through Q4 when COVID levels were up 60, 70% in the environment, we were able to do that with learnings we had from how to run it in the first half of 2022. But we're now seeing, you know, a lot of those rates, particularly in the bigger cities, where a lot of the business is transacted, to drop off quite a bit. And so our estimates would be, you know, Q1, I think, is going to be a little bit choppy based on the type of products.

Are those extend out.

Those are realized over the coming quarters, and then how to think about that $10 billion on a go forward basis is that kind of the power level to think about GE healthcare as we think about that going forward and you'll be given out these kind of metrics going forward. Thank you yeah. So Ryan I think to the.

The IPO. So we feel good about in Q4, and our book to Bill ratio of one thought our seven and this really I think demonstrated that they that the markets are strong the book to Bill the way how we define it is really I think quite simple calculation across the whole portfolio and the masks and forget we had quite a large services business in <unk>.

Peter Arduini: You know, if I think of flowable products like our PDX is tied to procedures, probably a lower level of procedure volume in that quarter versus how we would see Q2, Q3, and Q4. But on equipment, we actually would expect that it's still gonna be reasonably strong, and it's driven by a different dynamic, which is the stimulus funds that are out there and requiring products to be taken on install. We also make some products that actually help assist with COVID patients, whether it be monitoring or vents or other products in CT and stuff. So there's a bunch of different activities going on, but we would expect that China will continue to ramp throughout the year.

You know, if I think of flowable products like our PDX is tied to procedures, probably a lower level of procedure volume in that quarter versus how we would see Q2, Q3, and Q4. But on equipment, we actually would expect that it's still gonna be reasonably strong, and it's driven by a different dynamic, which is the stimulus funds that are out there and requiring products to be taken on install. We also make some products that actually help assist with COVID patients, whether it be monitoring or vents or other products in CT and stuff. So there's a bunch of different activities going on, but we would expect that China will continue to ramp throughout the year.

As well where book to Bill is one also the pdx business for us as a book to Bill of one so.

So when we look at across the portfolio you will see book to Bill is actually higher in our imaging products that we have obviously from taking the order until shipment and it takes a long time.

And we are quite comfortable with the backlog historically that book to Bill I would say has been running in similar ranges. It would have been up by about.

After 110 level at certain quarters, if you look at historically, but its running at a very solid basis at this stage as it relates to our IPO. The IPO as you mentioned is a big amount that we have.

Peter Arduini: And again, we can't predict all the different changes that may take place, but our take at this point in time is, you know, Q1, a little bit more tempered, and then continued improvement throughout the year.

And again, we can't predict all the different changes that may take place, but our take at this point in time is, you know, Q1, a little bit more tempered, and then continued improvement throughout the year.

This closed and we're quite happy with the backlog the IPO debates defined I want to be ultimately be clear on its defined as back office is noncancelable.

Jason Bednar: Okay. That's helpful. Thanks, Pete. Then, maybe just as a follow-up, with respect to pricing, I'll come back to that topic here. You know, Pete, you and the team do have a lot of confidence in pricing tailwind supporting growth here going forward. I know we've talked a lot about price increases on products and goods, but, you know, I guess, how are you seeing pricing play out on the services side of your business, and are you anticipating similar pricing power there over time with your service contracts? Thank you.

Also have backlog that is not that is cancel a burden that we see very very little very few cancellations in our from our customers because they are committed to the product.

That's really how we look at the IPO and we exited the year very strong position both on the <unk> side as well as the total backlog and just to be clear. The IPO. It is $14 billion I don't know if date that better $10 billion number you quote that came from but it is $14 billion at the end of 2022.

Peter Arduini: Yeah. No, I think. Look, well, I would just say on broader pricing, our job to get price really comes down to is to bring more value to the customer to help solve their problems. And the more we can create products that really solve a bigger issue, you know, we can get our fair share of more pricing. And so, you know, having your organization, your teams aligned in thinking that way, having a gross margin focus as well, is something we've just driven across the company and built into compensation plans, built into focus. So I think that's an important part. And it goes for both equipment and services. Obviously, with services, there's a different type of horizon, usually multi-year, how you think about it.

Thanks, Howard Thanks for taking the questions.

Thank you thanks Ryan.

Thank you.

Our next question comes from Jason Bednar with Piper Sandler Your line is open.

Hey, good morning, everybody and again I'll echo the congratulations here.

In the quarter and the guidance.

So at this point and everything.

I do want to touch here on China and build on the.

The discussions in prior questions.

I think most acknowledged there is some level of pent up demand in that market I know you've referenced that Pete.

Peter Arduini: We're also investing in innovative new services, whether they be different types of remote capabilities. Again, when you think about the break-fix side of our business, these are highly valuable products that, you know, being down for a half a day or a day, can wipe out a lot of profits for the institution. So if you have capabilities to be able to keep the product up running, you know, customers are able to pay more for that. The other aspect is there are other services, with an S on the end, and some of those are digital, on how you run your operation, how you can run capabilities. And in those cases, we can obviously ask for even higher prices as well as better margins than what we would have from normal break-fix.

We're also investing in innovative new services, whether they be different types of remote capabilities. Again, when you think about the break-fix side of our business, these are highly valuable products that, you know, being down for a half a day or a day, can wipe out a lot of profits for the institution. So if you have capabilities to be able to keep the product up running, you know, customers are able to pay more for that. The other aspect is there are other services, with an S on the end, and some of those are digital, on how you run your operation, how you can run capabilities. And in those cases, we can obviously ask for even higher prices as well as better margins than what we would have from normal break-fix.

Might be tough to call right now, but how do you see the China market unfolding here for key health care in 2023.

And really as we move through throughout the year, if theres any cadence you'd like us to think about and then maybe you could speak to what you've embedded in the guide for China. This year.

Yes, Jason I think look I think China is obviously tricky to fully estimate how things will play out I mean, we're cautiously optimistic but again if you pull the lens back you look at the market.

Take a look at how in many cases procedures have been suppressed over the last 18 months at least potentially even 24 months.

Things are clearly opening up and yes, theres challenges within the.

Peter Arduini: But we've been successful at taking selective increases. And again, with more of these advanced products, the related service contracts for them, will also have a tail of better pricing, down the road as well.

But we've been successful at taking selective increases. And again, with more of these advanced products, the related service contracts for them, will also have a tail of better pricing, down the road as well.

The hospitals now with with Covid patients and such but if we think of our own facilities.

We've been able to keep running through Q4, when COVID-19 levels were up 60, 70% in the environment, we were able to do that with learnings we had from how to run it in the first half of 'twenty two but we're now seeing a lot of those rates, particularly in the bigger cities, where a lot of the business is transacted to drop off quite a.

Operator: Our next question, and our last question, comes from Yuan Zhi with B. Riley. Your line is open.

Yuan Zhi: Good morning. This is Yuan, and thank you for taking our questions. I have a couple of them related to the pharmaceutical diagnostic business. First, on PDX. PDX was listed as a revenue priority. Can you elaborate on, between molecular imaging and contrast media, which segment would drive the growth you guys have mentioned? And I have a follow-up question. Thank you.

And so our estimates would be Q1, I think is going to be a little bit choppy based on the type of products. If I think of global products like our pdx is tied to procedures probably.

A lower level of our procedure volume in that quarter versus how we would see acute quarters, two three and four but on equipment. We actually would expect that it's still going to be reasonably strong and it's driven by a different dynamic which is the stimulus funds that are out there and requiring products to be taking on install.

Peter Arduini: Yeah. No, look, a good question. PDX is definitely a growth driver. And again, I just want to reframe, as we've talked about all of our businesses, all of them have growth opportunities, and all of them have margin expansion, but PDX has more of a growth priority up front. And I think it's both sides of the PDX health, both our contrast business as well as our MI business, we're expecting to see accelerated growth. As an example, in contrast, with the growth of the imaging procedures that we're talking about, anything that needs a contrasted base capability, like a vascular study, with our leadership position in contrast, ionized imaging, we're gonna continue to see that increase. So I think that's one.

We also make some products that actually help assist with COVID-19 patients, whether it be monitoring events or other products and <unk> and stuff. So there's a bunch of different activities going on but we would expect that China will continue to ramp throughout the year.

And again, we can't predict all of the different changes that may take out but our take at this point in time is Q1, a little bit more tempered and then continue improvement throughout the year.

Okay. That's helpful. Thanks, Pete and then maybe as a follow up.

Respect to pricing I'll come back to that topic here.

Peter Arduini: On the molecular imaging side, again, with the rise of new agents that are out there, whether they be in prostate or different neuroscience-based agents, we would be expecting to see that pick up. I would say the contrast agent is probably more of a temporal or closer 2023 impact, and the MI is probably has more of an impact later in 2023 into 2024, just to kind of give you a profile of how we think about the growth there.

On the molecular imaging side, again, with the rise of new agents that are out there, whether they be in prostate or different neuroscience-based agents, we would be expecting to see that pick up. I would say the contrast agent is probably more of a temporal or closer 2023 impact, and the MI is probably has more of an impact later in 2023 into 2024, just to kind of give you a profile of how we think about the growth there.

Pete you and the team do you have a lot of confidence in pricing tailwind supporting growth here going forward I know, we've talked a lot about price increases on products and good but I guess, how are you seeing pricing play out in the services side of your business and are you anticipating similar pricing power there over time with your service contracts. Thank you.

Yes, no I think look I would just say on broader pricing our job to get price really comes down to is to bring more value to the customer to help solve their problems and the more we can create products that really solve the bigger issue. Yes, we can get our fair share of more pricing and so.

Yuan Zhi: Got it. Thank you for the helpful color there. The follow-up question is, our understanding is that the products, such as Optison for ultrasound and Vizamyl for Alzheimer's disease PET scan, are maintaining a healthy growth margin. Can you maybe help us understand what prevents competitors to lower price and gain a larger market share, while at the same time, what stops other companies entering this space and making generic compounds of this product?

Having your organization your teams aligned in thinking that way, having a gross margin focus as well is something we've just driven across the company and build into compensation plans built in to focus. So I think I think that's a important part and it goes for both equipment and services, obviously with services.

There is a different type of horizon using multi multi year. How you think about it. We're also investing in innovative new services, whether they be different types of remote capabilities again, when you think about the break fix side of our business. These are highly valuable products that being down 4%.

Peter Arduini: ... Thank you. Yeah, no, it's a, it's a good question. I, I would say, first of all, they, they do have healthy margins. One of the interesting things about our pharmaceutical diagnostic business, both in contrast and MI, that you had referenced, is, you know, the proprietary nature of how we make it, I would say the capital hurdles of the infrastructure, and then the sophistication of the infrastructure. And just to give an example, if, if there is a typical molecule in the pharmaceutical world that comes in a 10 mL vial, and a generic comes out, people can have five ready, they can be shelf stable, they can be shipped around the world, stored for two years. Many of our agents are made that have half-lives. They're radioactive, right? That only can live for maybe a couple days.

A day or a day.

Can wipe out a lot of profits for the institution. So if you have capabilities to be able to keep the product up running customers, who were able to pay more for that the other aspect is there are other services with an S. On the ended some of those are digital on how you run your operation how are you.

Can run capabilities and in those cases, we can obviously ask for even higher prices as well as better margins than than what we would have from normal break fixed but we've been successful taking selective increases and again with more of these advanced products the related service contracts for them.

Peter Arduini: You literally have to have production capabilities, cyclotron set up, a distribution network on how to deliver radioactive capabilities to pharmacies. We have that infrastructure and that know-how. Even though some of these will have patents on them, the actual barriers to entry are more around the infrastructure and capability than they are based on particular IP and the normal pharmaceutical space.

You literally have to have production capabilities, cyclotron set up, a distribution network on how to deliver radioactive capabilities to pharmacies. We have that infrastructure and that know-how. Even though some of these will have patents on them, the actual barriers to entry are more around the infrastructure and capability than they are based on particular IP and the normal pharmaceutical space.

We will also have a tail of better pricing down the road as well.

Our next question and our last question comes from Bianchi with B Riley.

Your line is open.

Good morning.

Thank you for taking our questions.

Relative to the pharmaceutical diagnostic business.

Operator: That concludes the question and answer session. Please proceed with any closing remarks.

Pdx PD excellent mis hit as any revenue priority can you elaborate on between molecular imaging and contrast media, which segment will describe the gorilla.

Peter Arduini: Thank you. So look, in closing, let me just reiterate how excited I am about our path forward as we invest in our business. The emphasis on innovative products and high growth areas, many we talked about today. We delivered strong organic revenue growth and sequential margin improvement in the fourth quarter, and we expect to capitalize on robust demand in 2023 as we execute on our revenue drivers across each of our segments. We're also optimizing the business through Lean. We've given quite a few examples today, and this gives us confidence in our ability to reach our margin targets and drive meaningful shareholder value over the long term. Our full team is united and excited about our purpose-driven approach for the benefit of customers and, most importantly, patients that we serve.

Mentioned.

Follow up question. Thank you.

Yes, no look good question Pdx is definitely a growth driver and again I just want to reframe as we've talked about all of our businesses all of them have growth opportunities in all of them have margin expansion, but pdx as more of a growth priority upfront.

And I think it's both sides of.

The pdx out both our contract business as well as our EMS business, we're expecting to see accelerated growth as an example in contrast.

With the growth of the imaging procedures that we're talking about anything that needs. A contrast base capability like a vascular study with our leadership position. In contrast, <unk> imaging, we're going to continue to see that that increase so I think that's one on the molecular imaging side again.

Peter Arduini: So thank you for joining us today, and we look forward to seeing you at one of our upcoming conferences that we'll attend. Thank you very much.

So thank you for joining us today, and we look forward to seeing you at one of our upcoming conferences that we'll attend. Thank you very much.

Operator: Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect. Everyone, have a great day.

With the rise of new agents that are out there whether they'd be in prostate or different neuroscience based agents, we would be expecting to see that pick up I would say. The contrast agent is probably more of a temporal or closer 23 impact and the <unk> is probably.

He has more of an impact later in 'twenty three 'twenty four just to kind of give you a profile of how we think about the growth there.

Got it. Thank you for the helpful color. There. The follow up question is our understanding is that the product such as <unk> for ultrasound and wisdom mail for Alzheimer disease pet scan maintaining a healthy gross margin can you maybe help us understand what prevents.

Competitors to lower price and gain a larger market share while at the same time was stopped other companies entering the space and making generic compounds of this product okay.

Yes, no. It's a good question I would say first of all they do have healthy margins one of the interesting things about our pharmaceutical diagnostics business. Both in contrast and that.

That you had referenced.

Is the proprietary nature of how we may get I would say the capital hurdles of the infrastructure and then the sophistication of the infrastructure and just to give an example, if there is a typical molecule in the pharmaceutical world that comes in a 10 Mil vial.

And a generic comes out people can have five ready they can be shelf stable. They can be shipped around the world stored for two years. Many of our agents are made that have half life. Their radioactive right that only can live for maybe a couple of days and so you literally have to have production capabilities cyclotron setup.

Distribution network on how to deliver radioactive capabilities to pharmacies, we have that infrastructure and that knowhow and so.

Even though some of these will have patents on them. The actual barriers to entry are more around the infrastructure and capability than they are based on particular IP in the normal pharmaceutical space.

That concludes the question and answer session. Please proceed with any closing remarks.

Thank you so look in closing let me just reiterate how excited I am about our path forward as we invest in our business the emphasis on innovative products and high growth areas. Many we talked about today, we delivered strong organic revenue growth and sequential margin improvement in the fourth quarter, and we expect to capitalize on robust.

<unk> and 'twenty three as we execute on our revenue drivers across each of our segments and we're also optimizing the business through lean, giving quite a few examples today and this gives us confidence in our ability to reach our margin targets and drive meaningful shareholder value over the long term our full team is United and <unk>.

Sighted about our purpose driven approach for the benefit of customers and most importantly patients that we serve so thank you for joining us today and we look forward to seeing you at one of our upcoming conferences that will turn thank you very much.

Thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect everyone have a great day.

Q4 2022 GE HealthCare Technologies Inc Earnings Call

Request a DemoDemo

GEHC

GE HealthCare

Earnings