Q1 2023 GE HealthCare Technologies Inc Earnings Call

Speaker 1: Good day ladies and gentlemen and welcome to the Gee Healthcare first quarter 2023 earnings conference call. My name is Livia and I'll be your conference coordinator today. As a reminder this conference is being recorded. I would now like to send the program over to your host for today's conference Callen Borders Chief Investor Relations Officer. Please proceed.

Speaker 2: Thanks, Livia. Welcome to GE Healthcare's first quarter 2023 earnings call. I'm joined by our President and CEO , Peter Arduini, and Vice President and CFO , Helmut Zottel. These call remarks will include both GAAP and non-GAAP financial results.

Speaker 2: 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 statements are based on how we see things today.

Speaker 2: 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. I'm very pleased by the solid performance we delivered in our first quarter as an independent company.

Speaker 3: The momentum we demonstrated last year has continued, and I'd like to thank our teams across the world for their continued dedication to executing on our precision care strategy.

Speaker 3: We delivered strong 12% year-over-year organic revenue growth with contributions coming from all of our segments, driven by increased fulfillment, improved pricing, and commercial execution.

Speaker 3: We expanded adjusted EBIT margin year over year through price and lien initiatives focused on cost and operational effectiveness, and we're on track to achieve our margin expansion goals for the year.

Speaker 3: We continue to monitor customer prioritization of capital purchases of our products, and we are cautiously optimistic given resilient end market demand.

Speaker 3: Supply chain challenges are improving, giving us line of sight throughout the remainder of the year.

Speaker 3: We continue to invest organically to deliver long-term growth, demonstrated by the 13% year-over-year increase in R&D in the first quarter, in line with top-line growth.

Speaker 3: In addition, we acquired CaptionHealth and Amactus, which provided access to new technologies, markets, and clinical capabilities.

Speaker 3: I also want to highlight today's declaration by our board of a 3 cent dividend for the first quarter of 2023. This reflects our confidence in the durability of our cash generation, a disciplined capital allocation strategy, and our commitment to returning value to shareholders.

Speaker 3: Overall, the momentum we see in our business gives us confidence in our abilities to deliver on our full year 2023 guidance. With that, let me hand the call over to Helmut to walk through our financials and business segment performance..

Speaker 4: Thanks Pete. Turning to our financial performance.

Speaker 4: For the first quarter of 2023, revenues of 4.7 billion increased 8% year-over-year and grew double digits at 12% organically.

Speaker 4: This was primarily driven by strong product growth across all segments.

Speaker 4: A trusted EBITS margin improved year-over-year to 14.1%, growing 150 basis points on a standalone basis versus last year.

Speaker 4: Matching was up to the higher volume, which was partially offset by the mix of products versus services.

Speaker 4: In addition, we were able to mostly offset inflation and plan investments through our pricing and productivity action.

Speaker 4: But we are pleased with our margin performance during the quarter, there is room for more improvement. We have lean action plans in place to continue to expand margins further through volume, price and productivity initiatives across the company.

Speaker 4: Adjusted EPS was 85 cents, up 35% on a standalone basis, driven by strong revenue growth as well as margin expansion efforts. Free cash flow of 325 million was down 46 million as expected based on new spin-related items which I will discuss shortly.

Speaker 4: Total company book to bill, which as a reminder is a calculation of total orders divided by total revenue was 1.01 times.

Speaker 4: This was driven by strong remedy growth across all our segments, led by a recurring PDX phase.

Speaker 4: We continue to see customers invest in solutions that provide better clinical insights and productivity across the US.

Speaker 4: People must invest in solutions that drive better clinical insights and productivity across the US, China and Europe .

Speaker 4: Moving to revenue performance.

Speaker 4: We grow 12% organically year over year.

Speaker 4: Foreign exchange was a headwind of 4% to revenue growth during the quarter.

Speaker 4: On a reported basis, product revenue increased 12% year-over-year, driven by PDX sales with strong demand from increased procedures.

Speaker 4: Services revenue could be 1% versus the first quarter of 2022.

Speaker 4: Our strong product growth will translate to services growth as we go forward.

Speaker 4: From a regional perspective, we are pleased to see all regions growing with China up double digits.

Speaker 4: We are pleased with our Marching Performance Disc water as we continue to focus on improvements in delivery, price and productivity.

Speaker 4: We delivered a positive sales price for four consecutive quarters with growth in all segments.

Speaker 4: These efforts, combined with our productivity initiatives, enabled us to generate year-over-year and sequential gross margin expansion.

Speaker 4: We also continue to see supply constraints easing with spotpies and logistics caused downed sequentially and year-over-year.

Speaker 4: The actions we've taken to broaden our supply base, covered with the continuous application of lean principles, has helped us to recover by almost 8,000 parts since COVID began.

Speaker 4: This has led to the lowest number of red flag parts since the first quarter of 2021, enabling us to deliver for patients and customers.

Speaker 4: which is our top priority. As we look at our platform in initiatives, we have made good progress in CT with increased and a cessation of components across the portfolio.

Speaker 4: We've identified opportunities for simplification, sourcing, purchasing and manufacturing. We are in the process of implementing similar changes in MR.

Speaker 4: Following our spin-off from GE, we are on track with planned exit of TSAs, with approximately 40 exit-its to date.

Speaker 4: We remain focused on reducing G&A costs, for example with real estate expense and IT costs.

Speaker 4: Moving forward, we see opportunities to expand margins through additional actions, for instance in logistics with greater shifts from air to ocean and greater platform standardization. Before I get into the segment commentary, let me remind you that the

Speaker 4: In 2023, approximately 200 million of recurring standalone costs will be impacting our segment at bitmatch and rate.

These costs are generally allocated based on revenue and did not exist in 2022.

Turning to imaging.

We saw strong organic revenue growth of 12% year-over-year. This was led by MR, as well as molecular imaging and CT. TrimFi supply chain full shipment improvement and growth in revenue from MPIs.

We expect continuous high growth throughout the first half of 2023 that will normalize throughout the rest of the year.

Imaging demand is expected to remain healthy, supporting top-line growth. Second and second, EBIT margin of 7.7% to current 120 basis points over year, as planned investments and mixed outweighed higher volume.

for the activity and pricing initiatives modern offset inflation.

We expect sequential margin rate improvements as we move through Alphagia.

Through lean efforts in imaging, we initiated a rolling 13-week schedule to maximize factory output and customer satisfaction.

This will improve fulfillment as well as working capital.

Overall, we expect steady growth in the 2020-23 with a number of drivers including a continuous backlog of procedures, expanding indications for high and diagnostic exams, and new therapies requiring precision imaging.

Moving to outer self.

We saw strong organic revenue growth up 10% year over year led by cardiovascular, channel imaging and women's health products.

This was driven by MPIs and improving supply chain fulfillment with fewer electronic component shortages.

While we expect close to normalize as we move to their after-wrestling of the year, we continue to see strong customer demand in both hospitals and other care settings.

Second-added margin of 24.1% was at 50 basis points year-to-year.

We realize benefits from productivity and pricing initiatives, along with voting growth.

This enabled us to offset headwinds for inflation and planned investments, including the caption health acquisition.

We expect the Appetite Marching Rate will remain generally in line with the prior year. We continue to focus on patient and customer-centric innovation, especially digital and artificial intelligence solutions.

Moving to patient care solutions. Revenue was up 11% organically, driven by volume and price.

This resulted from greater backlog fulfillment as supply challenges eased.

particularly for electronic components. We benefited from dual-side production for highly-consuming products.

Revenue was also driven by the launch of key MPIs contributing to increased volume, such as care-scale canvas and the B-100 series of acute care monitors.

PCR as specular remains strong, which will contribute to revenue growth into the future.

We expect water to be ready to all us to remain relatively consistent through us 23.

PCS margins of 14% increased 490 basis points compared to the first quarter of last year, trim by productivity, price and volume.

These are partially offset by inflation as well as planned investments.

Productivity in the first world was driven by favorable logistics and lower spotpies.

We expect epic marching raids to normalize throughout 2023.

Moving to pharmaceutical diagnostics. We saw strong organic revenue growth up 19% year-over-year, driven by price, increased procedures and the stabilization of supply.

We expect from this revenue growth for the year based on favorable comparisons in the second quarter and the fourth quarter.

Second, as a bit margin of 27.8% began 70 basis points year over year, mainly driven by raw material inflation and plant investment.

This was partially offered by price and volume and productivity, which also drove 480 basis points of sequential improvement.

We continue to expect the segments to deliver strong epic margin performance.

As we look ahead, we are investing in capacity to meet future customer demand.

As we look ahead, we're investing in diversity to meet future customer demand.

Next, I'll walk through our cache performance.

During the quota we generated 325 million of free cashflow.

This was found for the 6 million year over year, impacted by 85 million of incremental post-retirement benefits payments, and 42 million of interest payments.

which were not in our 2022 Actuals. Without these new poll-related items, your EF3 cashflow would have been positive for the quarter.

Working capital improves year over year, primarily driven by collections and inventory efficiency.

We have leveraged lean to implement a daily inventory management system. In the first quarter we achieved solid results from controlling and better predicting inventory inputs and outputs, we showed the lead times and improved revenue conversion cycle.

As a result, we saw faster inventory turns in over 100 million of improvements in intra-quaster inventory.

Strong cash flow generation will allow us to pay down debt and invest inorganically in our business.

We are pleased to initiate a dividend with opportunity for growth over time. Our dividend philosophy is driven by prudent capital planning as well as a strong revenue and earnings growth potential and the robust free cash flow profile. Our balance sheet remains strong.

with significant financial flexibility.

Let's move on to our outlook.

For the full year of 2023, we are reaffirming our guidance.

We continue to expect year-year organic revenue growth in the range of 5-7% with stronger organic growth in the first half of the year versus the second half.

In line with seasonality, we expect revenue dollars to grow for half to second half.

Our current view is a foreign exchange headwind of less than 1% of points for the year. We continue to expect fully adjusted APEC margins to be in the range of 15 to 15.5%. This will represent an expansion of 50 to 100 basis points over a 2022 standalone adjusted APEC margins of 14.5%.

We also expect to see an increase in the justice epidemic-match and rates from the first half to the year to the second half, through a higher volume and productivity benefit.

We expect R&D investment to grow at the higher end of the 2023 organic revenue growth range.

Our guidance for adjusted effective tax rate remains in the range of 23 to 25%.

Our full year 2023 adjusted EPS is unchanged in the range of $3.60 to $3.75 per cent, representing 7 to 11 per cent growth. This compares to 2022 and along the adjusted EPS of $3.38.

We continue to expect free cash for conversion to be 85% or more for the full year.

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 will represent up to 10 points of free cash flow conversion for the year.

For 2023, we expect capital expenditures to be in the range of 350 to 400 million.

I'd like to add that our second and fourth quarter cash flow will be impacted by interest payments as roughly 75% of our interest expense related to a long-term debt is paid out in these quarters. Given this interest payment timing, we expect lower cash generation in the second quarter versus the first quarter.

Cash flow will be substantially higher in the second half of the year relative to the first half due to typical cash disanality and annual timing of supplier and compensation payment. In closing, it has been a strong start to the year and we are confident in reaffirming our guidance. Now I'll hand back to you.

Thank you, Helmut. Before turning to Q&A, I want to provide an update on some exciting focus areas in our business.

In imaging, we're energized about the developmental advancements we're making with photon counting CT technology from proof spectral and spatial resolution, reduced radiation, enhanced contrast to noise ratio of tissue at a molecular level.

This step change in technology will help provide clinicians with more capabilities to significantly increase imaging performance across a variety of care pathways.

We believe we're on the right path towards the industry's second generation of photon counting technology with a deep silicone approach for even better resolution and clinical results. This technology will expand our imaging capability into high-fetched helical and gated cardiac imaging, which are just a few of our important milestones in development.

During the quarter, we also announced our acquisition of caption health, which expands access to artificial intelligence powered ultrasound imaging guidance for novice users.

We're utilizing AI to provide real-time expert guidance to the user. And this helps us obtain diagnostic images providing advancements for patient care outside the typical hospital only setting. And while we'll be starting with cardiac care pathway, we expect to extend this to other specialties in the future through continued R&D investment.

In our patient care solutions business, we announced the FDA 510K clearance of our care-scape Canvas monitoring platform.

This interoperable solution can flex based on individual patients' needs for precise care. The platform also offers continuous upgrade capability, so hospitals can adopt new technologies at their own pace for efficient fleet management across the different care pathways they serve.

This series of NPI's represent initial steps towards realizing mission critical infrastructure transformation that leverages the Edison platform and enables artificial intelligence and patient monitoring.

In neurology, we've been watching the emergence of disease-modifying therapies for Alzheimer's and the positive impact on patients.

With the success of these advancements, we anticipate the need for more imaging.

G.E.L. Care is one of the only companies that has a full suite of products and solutions to support the entire Alzheimer's patient journey. And this includes our Visimol Diagnostic Agent and PET Scanners, which can be used to confirm diagnosis and the MRI systems to monitor throughout the therapy.

I'm also pleased with the initial progress that we've made since forming our science and technology operations led by Dr. Taha Kashoot, our Chief Technology Officer. Specifically, we're driving cloud adoption to deliver on our digital innovation strategy and also building out these capabilities into our device portfolio.

Last week, we met with many customers and collaborators at the healthcare, information, and management system society, the HIMS meeting, where we featured our growing portfolio of digital and AI innovations to help increase operational efficiencies, improve diagnostic confidence, and support early interventions. Interventions.

In closing, I want to reiterate that we're encouraged by the strong results we delivered in the first quarter. Our margin improvement initiatives are taking hold and we see ongoing opportunities to drive productivity and growth.

Our backlog remained solid and we're confident that we are investing in the right areas to drive long-term innovation.

And with reaffirmating of our guidance to the year, we're demonstrating our commitment to delivering for customers and shareholders.

Lastly, our team continues to be passionate about making a difference for patients. We recently held our first patient care week where employees had the opportunity to experience the real impact of our products, solutions, and services, and how they're driving and delivering better outcomes for patients and also access to care.

This is a great example of the cultural transformation taking place at GE Health Care. With that, we'd like to open it up for questions. Livia, we're ready to open for questions. Thank you, Lief and gentlemen. As a question, you will need to press star 11 on your telephone.

Morning. Morning, right? Sorry I was on mute there. Congrats guys, good morning, and I just want to start off. So.

The book to build ratio came in at 1.01. I think orders were down if I'm not mistaken from last year, by about 3%, 2.7%. But just correct me if I'm wrong on that helmet, because it's just a summation number in the G.

from last year. And then, you know, how do you think about kind of the seasonality of this dynamic, the book to build ratio, as we progressed through the year? Yeah, right. I think let me probably remind you the calculation of the book to Bill is the orders over revenue. So our first quote, the book to Bill.

At one point in a zero one is really reflecting our 12% revenue growth, so it includes full film and especially our PDX sales. In PDX we have a one-to-one ratio of book to bill. The backlog maybe felt covered that a little bit, grew sequentially. So our RPO is now at around 14.5 billion which is up in a one-to-one ratio.

Our Optio is slightly up on the YouTube basis.

And Ryan, I would just add, I think, you know, we had a strong quarter and Q1 of last year. The numbers came in this year right on track. We'll expect that to continue to grow. And again, just emphasize, Elmwood's point. You know, when you have a high performance on something like a flowable product, like PD-AX and stuff.

if Fundamalley is kind of a net neutral one-to-one transfer through. But the team delivered what we needed to deliver and we're on track here to what we believe we need for orders growth throughout the year.

Got it. Very helpful. And just want to ask about, we've heard some comments about the diagnostic pipeline improving and then driving the procedural environment. We heard that from some of the Medtech peers last week. And Pete, I'd love to get your perspective on the environment.

Particularly from a diagnostics perspective, I mean, you're seeing it probably through some of the imaging volume and just kind of how you think about the balance of the year from a diagnostics screening perspective. Yeah, Ryan, it's a really interesting question and obviously we have a certain lens into it. Bye.

I think if you step back when I'm out in the road talking to customers and I've been with quite a few recently You're just seeing that you know almost any type of therapy really being to muskle skeletal would be in the cardiac oncology Everything is heavily gated by some level of diagnostic to choose you know a better

decision would it be an implant, some type of interventional device to precisely fit that patient. And so, particularly in the imaging world, we're still seeing significant demand and procedures for customers, meaning that their backlogs are still quite long. And again, we don't think this is necessarily a blip.

So we see it quite strong and it's interesting. It's not just a US phenomenon. I mean, we're seeing this in most markets around the world. Helmet, I don't know if you want to add it. Yeah, maybe right now that is a little bit. I think I've been spending a lot of time with our customers, especially devices and digital solutions. We've adjusted him in the last week. A lot of discussions, how are devices can really help strike productivity.

to reduce that challenge on the backlog and the shortages on personal the sum of our customers are having. That's really a key focus of our customer which drives demand.

Thanks for taking questions and congrats on the quarter. Thanks Ryan. Thank you. And our next question coming from the line-up, Anthony Patoni with Mizzouha Group, new London's Open.

Thanks, and good morning, congrats on a strong first quarter here. May be a few to a couple of free here. Just pick off with Ryan left off here. Maybe rounding out just the discussions with hospital customers. What are you hearing on the capital spending front? We've heard some in certain cases still very bullish.

Outlook certainly for imaging, but on certain high ticket items there seems to be a little bit of friction. So maybe just your thoughts on the CAPEX environment and then I'll have a couple of follow-ups. Thanks.

Anthony, you know, I would say not a lot has changed since we reported even in our fourth quarter from that standpoint. I think, you know, we're encouraged by kind of the steady recovery of the global procedures, which is really the underpinning of this, which says if you have a lot of patients that need procedures.

they need planning, they need evaluation done, and you don't have enough equipment, you know, that drives demand. And again, it's not always new sockets. It may be software and upgrades to your fleet to bring new capabilities. So we see that happening, and if I just go around the world, you know, China has strong growth, obviously.

western europe's quite stable i think that the continuation of some of the sick funds investment that took place coming out of COVID-19 really just starting to deliver on that equipment and the u.s. is you know look since COVID-19 uh... people have been prioritizing capital i mean so that's no new news for us but again what we keep an eye on is what they're deciding to put it against and i think what

Nursing costs starting to flatten out. You're seeing a little bit more of I would say positivity on that spend that being said We think we're going to be in a capital prioritization kind of focused throughout this year, which is why you know we're cautiously optimistic

That's helpful. And then the follow-ups, one for you, peed in a quick one for Helmet on Margin, intrigued by the comments on Alzheimer's disease. And maybe just a little bit of a description is that something that is driving demand now. And when you look out, how long do you think that tail...

that were brought into the business. Thanks again.

Anthony, look on the Alzheimer's point. No, I don't think we're really seeing any impact on demand to date. But when you look at what can come, what the pipeline looks like, we think there's going to be larger demand. I'll even pull the lens back a little bit further. It ties into part of Ryan's question as well. I think look bigger picture.

imaging capabilities and diagnostics used to kind of manage how devices are executed, but probably even more importantly, expensive pharmaceutical injectable therapeutics, how they're utilized, how they're titrated, how they may be dosed.

and the follow-ups on potential complications really seems to be a potential kind of norm in the future. So if you think about this case, neurosciences, if you think about in oncology with serenostics, if you think in cardiology with different follow-ups for structured heart or heart failure.

We see that happening and so, you know, we'll see how that plays out. But like in our case where we make the actual trace or visible for emolid beta plaque detection and quantification, really the only one that has that type of product that actually even colors it and separates it out.

It hasn't been reimbursed. And so we believe once the therapies get reimbursed meant like in other therapy areas, but companion diagnostics also do, that's what will enable some of the growth. And so I'm optimistic, like most things, that will take a little bit of time, but over the next few years, I think there's going to be some interesting growth opportunities.

Those are primarily for support functions, so it's IT, Treasury, IR, and so forth. And these costs, they are not in our segment margins, they were not in our segment margins in 2022. We're allocating them in 2023 based on revenue very generally, so I want to be sure that this is well understood.

And to your question, when we will see leverage against those ones, to me this is really dependent on how quickly we are exiting our TSAs. You saw me speak, we have exceeded 40 TSAs in the first quarter here, we have more TSAs to exit that will take us into 2024. So I expect we will see leverage against these 200 million dollars of incremental...

Jason Bettler with 5% Leriela Sullivan. Morning Jason. Morning Jason. Hey, good morning. Thanks for taking the questions. Congrats on a very nice start to the year. Maybe I'll start with organic growth. Just as we peel apart the components of the one few organic growths are...

Are you able to quantify how much of that 12% may have come from pure price? It looks like you're calling out price and tailwinds in each of the four segments of just curious if we should be thinking in the area of 1 to 2% to the 3% etc. When we think at the corporate level and then is that a sustainable figure as we look to future quarters or would you point us to maybe upward or downward bias in that pricing? Yeah Jason it's Pete I'll comment if Helmer wants to add in.

in our, in particularly our ultrasound business and then the flow with its taking place in PDX and the injectable business. You know, I'd say we're in the 2 to 3 percent range relative to price coming through and the vast majority of the rest of it's in pure volume and uplift. Maybe I'll let a little bit of comment on that this Wednesday.

I would keep saying, this is our fourth quarter in a row now that we are seeing positive sales price. And that is saying, 2 to 3% of the creation we expect in 2023. And in the outer years that might flatten out a little bit to 1 to 2%, but what's really most important is the value we are providing our customers in with those products.

And we not only focus on price, but also really focus on the gross margin expansion because as we see new NPIs, we're looking very carefully what's the price decrease, but also what happens in our margin increase with those products. And lots of initiatives in place around BCP and platforming that will help and support it.

All right, very helpful. Thank you both. I wanted to ask a follow-up, actually on Portrait Mobile. I think it was introduced almost a year ago. It's still pending, 510K, but you were shown it at HINS here recently. Can you discuss where you're at with the FDA and securing the approval, and then what early feedback can you share on Portrait Mobile for the markets in which it's been?

States, primarily EU. And if you think of the focus on portrait mobile, it really takes this into new territory. We haven't really been a ward-based monitoring company. And so that's really our first entree into the area.

We've already had some really good feedback from different customers on a naval and continuous monitoring in the war. I think one of the the bets that we're making is, coming out of COVID, they're tended to be more continuous O2CO2 respiratory monitoring. With the shortage of staff and stuff being able to instead of episodically.

but constantly manage a patient. There's a big opportunity to manage your labor better by directly sending a message directly to a caregiver to check on that patient, as opposed to just spot checking. So it's off and running. We'll talk more about it here in coming quarters, but we feel quite good about that.

have told us is the challenge they have is you have to buy a different box from everybody for the different areas. In CERSCAPE, it's one of those first platforms that enables you based on the acuity of the patient to add on more parameters. But it's also designed for a future where you can actually gather the data on the patient and be able to apply artificial intelligence against it to actually predict.

when that patient is going to have issues. And so that's kind of our vision of why we're so excited about monitoring, is this potential in the future to be able to track constant patient, constantly the patient, as well as predict when there might be an issue. So both of those are two new platforms for us, the first in many, many years, and we would expect that to be.

two of the horses in the monitoring group here that will be growing our business on. Excellent. Thanks so much looking forward to it. Thanks. Thank you. And our next question coming from Delina of Ed Ridley Day with Redburn, you'll let us open.

Hi, good morning. Thank you for taking my question and congratulations to the strong quarter. Firstly, on imaging, great start of the year. If you could perhaps help us with the phasing on the margin. I appreciate a lot of investment, some of which you've spoken to today, given the opportunity.

If there's more colour you can give us in the phasing of the imaging margins for the year and where we should end up, that would be helpful. And I also had a follow-up question on patient care. Obviously a very positive start to the year. We've mentioned some of them, but where were the particular strengths in the product lines driving that growth? And also, I don't know if you can...

Can you give us an idea of how much of the growth in the first quarter was backlog pull through? So, you want to start maybe with comment on imaging and then we'll jump in. So, I'll start with imaging margin. So, obviously we are very focused on expanding the epic margins in the high teams, in the medium term in a four imaging and if you look at

In the first quarter, our margins were at 7.7% or 8% for imaging. Those were slightly lower than what we saw in the fourth quarter. But there was a clear reason, because we were shipping a higher and a component of hardware versus services in the quarter. But as we expect, the services pulled through, we expect those margins to improve. And what we also still were impacted in the quarter was, I would say, the cost for information. So what we have seen of inventory that was sitting on the balance.

Accordingly, eth inflation is getting less and less. Yeah, I mean, in the other aspect, as you could imagine, many of the imaging products are much more sophisticated components, a lot more chips and stuff. And so some of those are burdened with, I'd say, higher cost items that we buy last year to make sure we could deliver through cut for customers. And as that...

And why the scale kind of success in the quarter, I mean, monitoring business was double digits. Our Mick business, which is into the neonatal area, was quite well. And also our anesthesia business. And I would highlight anesthesia because, actually, at the end of...

And last year we actually received PMA for tidal control, which is actually kind of a management of parameters of oxygen and capturing of the agents in a much more effective way. And we were able to be able to capture more growth because of that upgradeability, but also some more value. So it's a good start to the year for our PCS business.

Thank you and one moment please for our next question. And our next question coming from the line up, Larry Begillson with Wells Fargo, Yelena Silveritez

Hey Larry, good morning, Debbie. Hey, good morning Pete, good morning Helmut. Thanks for taking the question. Pete, I don't think there's been a question on farm diagnostics yet. That was extremely strong. Pete, help us understand how much that benefited from the comps year over year, from the contrast shortage. But even when I looked at that business on a sequential basis, it was up.

So, what happened there, you know, what went well, and how to think about it from here, and I had to follow up. Yeah, Larry, the real impact from a constant point will be more in Q2. There really wasn't a negative fact last year. There was a little noise in it, just relative to...

to COVID and coming out, but this is really about procedures growth and the need to do contrast-based imaging. If you think about particularly in CT and the vascular world, any type of intervention you're going to do, intervascular, you're going to evaluate, you need to have a contrast agent whether it be the brain throughout the body.

And so it's showing that robustness there. We also have taken some, I would say, appropriate price increases to deal with escalating costs of things such as iodine. And so the combination in there is that procedures growth, which is driving our volume, but then also the pricing that we've taken place in PDX. And so we would expect that that businesses can continue to put up.

from in the US, so there's also going to be higher growth during that quarter. Overall, as Peter, we're very happy, I think, with that business, both the volume growth and all the prices are strong, contribute for the growth and margins as you've seen, quite strong, and will continue to improve.

Thanks for that. Pete, obviously we've seen media speculation on M&A involving GE Healthcare. And I know you won't comment on that specific asset. But can you comment on your thoughts on M&A in terms of the other side areas of interest and financial criteria? Thanks. Yeah, Larry. Look, I mean, you know, we always are as I've always been.

of looking at that whole atmosphere. And if you think about a MACDIS and caption are probably emblematic really what we look at. So again, to emphasize with a MACDIS, it brought interventional biopsy capabilities into CT. We didn't have the best offering. This is going to give us a leadership offering to really fill out the capabilities to grow our business.

I talked about CAPTCHA and bringing artificial intelligence into point of care ultrasound to start to make it more usable into populations of non-synographers, which we think is a huge opportunity. And so we look for technologies, both channel enablement as well as capabilities.

This is an imaging and ultrasound, PCS as well as PDX. And I'd say one of the encouraging things is there's a lot of interest out there and we'll be disciplined in our approaches about how we look at them. But I think it's an important part of our growth strategy over the next three to five years. All right, thank you. Thank you.

And our next question coming from the line of Veronica the Jehovah with CD Alanis open

Coming from Delino, Veronica DeBajava with CD Ilana Soapin. Hi guys, good afternoon.

maybe the type of products that you're seeing most traction for, you look across the Hawkeloch Catholic landscape with the premium of it, slow-end, I'll kind of how you're thinking about that. And then maybe just a circle back to China and whether that stimulus program that you had talked about in prior quarters is now coming to an end, and is that something that would have helped P1, or do you think it continues into P2? And any comment you have on the competitive end?

and planning on it throughout the year. As you know, there's certain quarters and certain cyclical plays that promote others more or less, but I think from a standpoint of a lot of our bigger traditional diagnostic imaging equipment, whether it be MR, our molecular imaging portfolio between PET-CT, PET-MR, our NukeMed cameras.

We're seeing actually strong demand as well as CT and those tend to be the three big items I would say within our interventional world particularly our surgery Business with sea arms with the growth of ambulatory surgical centers Those are a strong growers and then our ultrasound business, you know across the board has

multiple opportunities, our handheld business, in particular, women's health. And we would expect throughout the year, we had a strong cardiovascular quarter, last quarter, we would expect that with the new launch of the David product last year, the new Voluson product last year, all of those have two to three years to peak your sales that will continue to see that. And I think you heard me mention around PCS.

We actually, with fulfillment, we also have more cell and install opportunities as well. And I think the new monitoring platforms are going to drive growth and also the new anesthesia platform. So we see some pretty broad capabilities relative to our overall product. And then again, I'll just pull in PDX, but obviously that's driven as a...

with the good momentum, you know, going to the second quarter. And really, I think China is really back. So the manufacturing sites are all operating, you know, COVID. It has basically a decent tier. So we quite have to with the overall performance, you know, of our teams delivering, you know, for customers and patients. And then the stimulus, the market will remain strong, whether it is, you know, stimulus, you know, you know, believe it.

We really as a multinational led the face of making sure that we have local content to be able to compete in tenders, making sure that we have local content to be able to have the cost positions to compete and we believe we're in good shape to be able to do that. But as Helmut said, the bigger point here is after two years of...

COVID lockdowns, just like in the rest of the world, we would expect that there's some pen-up demand for procedures, maybe latent disease, things of that nature that are going to drive the need for our products. Very clear, thanks, guys. Thank you. And our next question coming from the line of, Vijay Kumar with Everkurai, Saalya Lannis Open.

Hey guys, congratulations on that. That's Q1 print and that. Thanks for taking my question. Maybe my first one here on the guidance here. Looks like Q1 off to a very strong start. Perhaps coming in slightly about expectations. But the 5 to 7 was that really career on the top line.

Can you just talk about why the guidance perhaps alone wasn't tweaked up? And clearly that 12% in Q1, we've seen the backlog being worked through component supplies, getting better. How much of that?

Back orders has been flushed out of the system, you know, and how much is remaining, perhaps some common on how we should think about this guidance and back orders would be helpful.

Yeah, look, I think good question. So first starts off where we're super happy and excited about our first quarter results. I think if you know how we expected it to play out, it really landed where we had hoped. And so that's a great result. I would say the big part here is what this does with a strong first quarter is it helps real.

as I mentioned, we're cautiously optimistic right now, but with our first quarter as a standalone company, to get a few more months under our belt, and then we'll reevaluate it here as we finish second quarter and take a new look at how that is. But at this point in time, again, we're cautiously optimistic that we're on track, and again, I think of it as, in many cases, kind of reducing that type of ramp that we already had within our initials.

And VJ, so you have a question around the backlog, obviously delivering for patients and customers is really our top priority. So reducing the backlog is key. And in the quarter, we have an RP over on 14.5 billion. It was very slightly up, you know, on a quarter to quarter basis. So despite the strong shipments and revenue delivery of 12%, the backlog actually was up, you know, sequentially. And as I've commented before, on top of the RTO, we also have, you know, other backlogs that is cancelled everywhere. We see, we see, there are never really any major cancellations at the total balance.

think we're in very good shape to do better. But at this point in time, it's kind of prudent. First quarter is a public company to kind of stay where we're at. And we're quite happy with the results.

Absolutely, the mid-hands. Then one that follow up on that margins here, clearly Q1 coming in. I thought Q1 margin performance was quite pleasing, despite the spot buys. Can you comment on what the pricing versus inflation spot buy dynamics was in Q1?

And when you think about it, ETS guidance for the year, what is being as you know, for effects for the year and in the margin range of 50 to 100 basis points, perhaps should be thinking about the high event of the range.

Yeah, I can cover that with your question here. So, price and product CBT was more than offsetting what we saw as inflation and our investment. So, we were quite happy what we saw on price. People commenting a little bit earlier. We typically see 2-3% in price and we expect that it will be delivered in an in 2023. So, that was quite positive.

In terms of currency, we saw a 4% point, a percentage point impact on currency in the first quarter. For the full year, we are looking now at the less than 1% point of a percentage point of impact on currency to the top line. So it clearly has gotten us slightly better. But the speed is earlier, this is really early in the year, this is our first quarter out here. And we committed to this.

to other cost reductions. The thing we don't know is how that will play out with other cost of goods labor increases and items that are out there playing out. We think we've got very good plans to be able to deliver what we committed At those were to improve. Obviously that would be a benefit that would come through in the PNL But as Helmut said, it's still early in the year and

Yeah, Alma, I've got two quick ones. Morning, I've got two quick ones which hopefully should be pretty easy. I guess the first is on, first on counting. When you're thinking about that, the initial clinical data from some of your peers has been, I would argue, very strong, versus base CT systems. So how do you view this technology? Do you view this as like market,

opportunity and are you thinking about it? Is this we talking commercialization within a year or two, or is it a longer time frame than that for you?

Yeah, look a question. I would say the first answer is how we're thinking about is what it's going to do to help with diagnosis, you know, patients and how it can change the game. I think, you know, we all think that photon counting has the potential to be a game change. And the point being is...

It brings some of the capabilities of MR, tissue characteristics and things of that nature that today you don't get on a CT scanner.

So I think at a high level, part of this is taking a look at and saying the technology we're delivering on has the possibility to have many more energy separation levels, which actually can give you much more insights into what's actually happening at a molecular level. More so then.

the first generation products which are based on cad tongue state for the most part. So that's part of it. I think, look, what we think is over time, all scanners most likely will move to that direction. You know, is that five years, ten years? I think that'll be the adoption question and a lot of that is about the cost curve.