Q2 2024 GE HealthCare Technologies Inc Earnings Call

July 31, 2024

Participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to participate you will need to press star one on your telephone.

Dan: Dan here message advising your hand this waste to withdraw your question simply press Star. One again, please be advised that today's conference is being recorded I will hand, the call over to the Chief Investor Relations Officer Caroline borders you may begin.

Caroline borders: Thanks, operator, good morning, and welcome to GE healthcare second quarter 2024 earnings call I'm joined by our President and CEO, Peter Arduini, and Vice President and CFO Jay Zaccaro.

Speaker Change: 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.

Speaker Change: During this call we will make forward looking statements about our performance. These statements are based on how we see things today.

Speaker Change: 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.

Peter: Thanks, Karen and thanks to all those joining us today.

Peter: In the second quarter, we delivered 1% organic revenue, 3% orders growth with all segments contributing we also expanded margins despite headwinds from the China market.

Peter: Saw particular strength in the U S. Given replacement cycles and increased use of imaging across disease stage for diagnostics and resilience in the ultrasound market.

Peter: Excluding China global revenue growth was 4% and orders growth was 6%.

Peter: We believe we're gaining market share in each of our segments and we are continuing to invest in products and services that will accelerate growth in the future.

Peter: As it relates to China performance, we previously communicated that the region will experience negative sales growth in the first half as we faced a challenging compare.

Peter: At the time, we expected positive sales growth in the second half today, a prolonged timing of the rollout of the new stimulus announced earlier this year is impacting timing of orders and sales.

Peter: We expect a continued sales decline in China year over year in the second half.

Peter: And we anticipate growth in China will be negative for the year.

Peter: As a result, we're lowering our total company full year organic revenue growth guidance. It is important to note that despite this revenue reduction we are maintaining our EPS guidance for the year.

Peter: Although we are disappointed with the second half reduction in sales growth. This is a temporary challenge and we expect to see China market orders recovery later in the year.

Peter: We continue to view this market as an attractive long term opportunity.

Peter: While China weighed on orders and revenues, we are encouraged by our margin performance in the quarter.

Peter: Our team has embraced lean and identified process and product improvements at the end of 2023 and the first half of 2024.

Operator: Friends call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session.

Peter: We're now seeing those benefits coming through our P&L, along with increased customer satisfaction, ultimately, resulting in higher win rates in products and services are.

Operator: To participate, you will need to press Star 11 on your telephone. You will gain here a message advising your hand is raised. So withdraw your questions. Simply press star 11 again.

Peter: We're making great progress executing improvements that deliver better value to our customers and patients.

Operator: Please, the advice that today's conference is being recorded.

We continue to view this market as an attractive long term opportunity.

Peter: Eliminating waste leveraging continuous improvement or kaizen.

Caroline borders: I will hand the call over to the Chief Investor Relations Officer, Caroline Borders. You may begin.

While China weighed on orders and revenues were encouraged by our margin performance in the quarter.

Peter: We run approximately 400 sessions throughout the year and recently completed our global CEO Kaizen.

Caroline borders: Thanks, operator.

Our team has embraced lean and identified process and product improvements at the end of 2023 and the first half of 2024.

Caroline borders: Good morning and welcome to GE HealthCare's second quarter 2024 earnings call. I'm joined by our President and CEO, Peter Arduini, and Vice President and CFO, Jay Saccaro. Our conference call remarks will include both GAAP and non-GAAP financial results. Reconciliation 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.

Peter: During the week, we held 28 events across our sites for my leadership team and I joined the call.

Peter: Colleagues to drive and execute process changes and improvements, which is a key aspect of our good kaizen.

We're now seeing those benefits coming through our P&L, along with increased customer satisfaction, ultimately, resulting in higher win rates in products and services.

Peter: Teams were focused on growth cost and working capital improvements some of which have immediate impact at the end of the week, while others will drive impact later in the year.

We're making great progress executing improvements that deliver better value to our customers and patients and eliminating waste leveraging continuous improvement or kaizen.

Peter: One of our cost improvement kaizen, a team consisting of engineering quality and sourcing build a plan for a high writing ctr platform that will reduce overall cost by 23% with 15% coming out in the first year.

We run approximately 400 sessions throughout the year and recently completed our global CEO Kaizen.

Caroline borders: As described in our SEC filing, actual results may differ materially due to risks and uncertainties.

During the week, we held 28 events across our sites for my leadership team and I joined the call.

Speaker Change: In Waukesha my team focused on improving our responsiveness to customer demand as well as cost savings for the Cta and <unk> products that we manufacture there.

Peter Arduini: And with that, I'll hand the call over to Peter. Thanks, Caroline, and thanks to all those joining us today. In the second quarter, we delivered 1% organic revenue and 3% orders growth, with all segments contributing. We also expanded margins despite headwinds in the China market. We saw particular strength in the US, given replacement cycles, an increased use of imaging across disease stage for diagnostics, and resilience in the ultrasound market. Excluding China, global revenue growth was 4%, and orders growth was 6%. We believe we're gaining market share in each of our segments, and we are continuing to invest in products and services that will accelerate growth in the future.

Colleagues to drive and execute process changes and improvements, which is a key aspect of our good qiagen.

Teams were focused on growth cost and working capital improvements some of which have immediate impact at the end of the week, while others will drive impact later in the year.

Speaker Change: We create a visual management tool called a high junk of board that shows plant capacity system availability and customer orders.

Peter: The new tool will help us level load production optimized manufacturing flow and meet customer demand while shrinking the lead time on our critical omni legend pet <unk> system by 31% and.

One of our cost improvement kaizen, a team consisting of engineering quality and sourcing build a plan for a high running ctr platform that will reduce overall cost by 23% with 15% coming out in the first year.

Peter: And reduce future cost to create these scanners. It was an energizing week for all <unk>.

In Waukesha my team focused on improving our responsiveness to customer demand as well as cost savings for the Cta and <unk> products that we manufacture there.

Speaker Change: Leveraging our productivity progress. This year, we are raising our adjusted EBIT margin guidance and we're reaffirming our outlook for adjusted EPS and free cash flow.

Peter Arduini: As it relates to China performance, we previously communicated that the region would experience negative sales growth in the first half as we face the challenging compare. At the time, we expected positive sales growth in the second half. Today, the prolonged timing of the rollout of the new stimulus announced earlier this year is impacting timing of orders and sales. We expect a continued sales decline in China year over year in the second half. And we anticipate growth in China will be negative for the year.

We create a visual management tool called a high junk of board that shows plant capacity system availability and customer orders.

Peter: Jay will discuss our outlook in greater detail later in the call.

Jay: Moving to commercial execution milestones as I mentioned, we had a strong quarter in the U S, where we secured more than $800 million of multi modality equipment software and service contracts.

The new tool will help us level load production optimized manufacturing flow and meet customer demand while shrinking the lead time on our critical omni legend pet Cts system by 31%.

Jay: The U S market continues to be robust, particularly in imaging.

And reduce future cost to create these scanners. It was an energizing week for all.

Jay: And ultrasound, we saw strong orders and sales growth in the region and continue to see a healthy pipeline for growth.

Speaker Change: Leveraging our productivity progress. This year, we are raising our adjusted EBIT margin guidance and we're reaffirming our outlook for adjusted EPS and free cash flow.

Jay: In July we made two important announcements to develop proprietary AI tools to help expedite clinical and operational efficiencies. This included our agreement to acquire the AI division of intelligent ultrasound a developer of AI tools for women's health ultrasound products and a strategic collaboration with.

Peter Arduini: As a result, we're lowering our total company full-year organic revenue growth guidance. It's important to note that, despite this revenue reduction, we are maintaining our EPS guidance for the year. Although we're disappointed with the second half reduction in sales growth, this is a temporary challenge, and we expect to see China market orders recovery later in the year. We continue to view this market as an attractive long-term opportunity. While China weighed on orders and revenues were encouraged by our margin performance in the quarter, our team has embraced an identified process and product improvements at the end of 2023 and the first half of 2024.

Speaker Change: Jay will discuss our outlook in greater detail later in the call.

Speaker Change: Moving to commercial execution milestones as I mentioned, we had a strong quarter in the U S, where we secured more than $800 million of multi modality equipment software and service contracts.

Jay: Amazon Web services to build foundation models, and generative AI tools to streamline hospital operations and care delivery.

Speaker Change: The U S market continues to be robust, particularly in imaging.

Speaker Change: And ultrasound, we saw strong orders and sales growth in the region and continue to see a healthy pipeline for growth.

Jay: Now I'll pass it to Jay who will take us through the details of our second quarter performance Jay.

Jay: Thanks Pete.

Speaker Change: In July we made two important announcements to develop proprietary AI tools to help expedite clinical and operational efficiencies. This included our agreement to acquire the AI division of intelligent ultrasound a developer of AI tools are women's health ultrasound products and a strategic collaboration with.

Jay: Let's start with our financial performance on slide four.

Jay: For the second quarter of 2024.

Jay: Revenues of $4 $8 billion were up 1% organically year over year recall this quarter's results compared to 9% growth in the second quarter of 2023.

Peter Arduini: We're now seeing those benefits coming through our P&L, along with increased customer satisfaction, ultimately resulting in higher win rates in products and services. We're making great progress, executing improvements that deliver better value to our customers and patients, and eliminating waste, leveraging continuous improvement, or Kaiser. We run approximately 400 sessions throughout the year and recently completed our global CEO, Kaiser, and We. During the week, we held 28 events across our sites where my leadership team and I joined colleagues to drive and execute process changes and improvements, which is a key aspect of a good Kaiser. Teams were focused on growth, cost, and working capital improvements, some of which have immediate impact at the end of the week, while others will drive impact later in the year.

Speaker Change: Amazon Web services to build foundation models, and generative AI tools to streamline hospital operations and care delivery.

Speaker Change: When we experienced easing supply chain constraints.

Speaker Change: You can see from our filing this morning, the continued market headwinds in China impacted total company sales growth in the quarter by approximately 300 basis points, meaning global sales growth, excluding China was approximately 4%.

Speaker Change: Now I'll pass it to Jay who will take us through the details of our second quarter performance Jay.

Jay: Thanks, Pete let's start with our financial performance on slide four.

Jay: Organic orders growth was solid increasing 3% year over year, driven by strength in the U S and rest of world.

For the second quarter of 2024.

Jay: Revenues of $4 $8 billion were up 1% organically year over year recall this quarter's results compared to 9% growth in the second quarter of 2023.

Jay: Excluding a 300 basis points impact of China on orders orders growth would have been 6%.

Speaker Change: When we experienced easing supply chain constraints.

Jay: Orders continue to outpace sales leading to a strong total company book to Bill of one six times versus one four times last year as a reminder, equipment only book to Bill is higher than total company book to Bill.

Speaker Change: You can see from our filing this morning, the continued market headwinds in China impacted total company sales growth in the quarter by approximately 300 basis points, meaning.

Peter Arduini: One of our cost improvement, Kaiser, a team consisting of engineering, quality, and sourcing, built a plan for a high running CT platform that will reduce overall cost by 23%, with 15% coming out in the first year. In Waukeshaw, my team focused on improving our responsiveness to customer demand, as well as cost savings for the CT and PET CT products that we manufacture there. We created a visual management tool called a hijunkabord that shows plant capacity, system availability, and customer orders. The new tool will help us level load production, optimize manufacturing flow, and meet customer demand while shrinking the lead time on our critical Army Legend PET CT system by 31%.

Speaker Change: Meaning global sales growth, excluding China was approximately 4%.

Jay: We exited the second quarter with a healthy backlog of $19 billion, including strong services growth.

Speaker Change: Organic orders growth was solid increasing 3% year over year, driven by strength in the U S and rest of world.

Jay: Adjusted EBIT margin was 15, 3% up 60 basis points year over year, driven by continued improvement in gross margin with productivity and price.

Speaker Change: Excluding a 300 basis point impact of China on orders Fortis growth would have been 6%.

Jay: Second quarter, adjusted EPS was $1 up 9% year over year, reflecting adjusted EBIT growth and lower interest expense.

Speaker Change: Orders continue to outpace sales leading to a strong total company book to Bill of one six times versus one four times last year as a reminder, equipment only book to Bill is higher than total company book to Bill.

Jay: Free cash flow was in line with our expectations and was negative due to the timing of certain payments.

Speaker Change: We exited the second quarter with a healthy backlog of $19 billion, including strong services growth.

Jay: On slide five let's take a closer look at segment revenue performance for the second quarter.

Peter Arduini: And reduce future cost to create these scanners. It was an energizing week for all.

Speaker Change: We saw a very strong <unk> sales growth of 14% organically aligned to global procedural demand.

Peter Arduini: Leveraging our productivity progress this year, we are raising our adjusted EBIT margin guidance, and we're reaffirming our outlook for adjusted EPS and free cash flow. Jay will discuss our outlook in greater detail later in the call. Moving to commercial execution milestones, as I mentioned, we had a strong quarter in the US, where we secured more than $800 million of multimodality equipment, software, and service contracts. The US market continues to be robust, particularly in imaging, IGT, and ultrasound. We saw strong orders and sales growth in the region and continue to see a healthy pipeline for growth.

Speaker Change: Adjusted EBIT margin was 15, 3% up 60 basis points year over year, driven by continued improvement in gross margin with productivity and price.

Jay: China market headwinds negatively impacted both our imaging and ultrasound segments.

Speaker Change: Second quarter, adjusted EPS was $1 up 9% year over year, reflecting adjusted EBIT growth and lower interest expense.

Jay: Service revenue on a reported basis increased 2%.

Jay: We continue to make very good progress on margin expansion, let's walk through this on slide six.

Speaker Change: Free cash flow was in line with our expectations and was negative due to the timing of certain payments.

Jay: In the quarter adjusted gross margin expanded.

Jay: 110 basis points and adjusted EBIT margin expanded 60 basis points. The team has made significant progress utilizing lean capabilities to focus on margin accretive actions as.

Speaker Change: On slide five let's take a closer look at segment revenue performance for the second quarter.

Speaker Change: We saw a very strong <unk> sales growth of 14% organically aligned to global procedural demand.

Jay: As a result of these actions adjusted gross margin increased 100 basis to 110 basis points and adjusted EBIT margin grew 60 basis points through the first half of 2024.

Speaker Change: China market headwinds negatively impacted both our imaging and ultrasound segments.

Peter Arduini: In July, we made two important announcements to develop proprietary AI tools to help expedite clinical and operational efficiencies. This included our agreement to acquire the AI division of Intelligent Ultrasound, a developer of AI tools for women's health ultrasound products, and a strategic collaboration with Amazon Web Services to build foundation models and generative AI tools to streamline hospital operations and care delivery.

Speaker Change: Service revenue on a reported basis increased 2%.

Speaker Change: We continue to make very good progress on margin expansion, let's walk through this on slide six.

Jay: Gross margin was particularly strong in pdx with volume and stabilization of raw material costs and imaging gross margin expanded led by new product introductions.

Speaker Change: In the quarter adjusted gross margin expanded.

Speaker Change: 110 basis points and adjusted EBIT margin expanded 60 basis points. The team has made significant progress utilizing lean capabilities to focus on margin accretive actions.

Jay: And our Pdx segment, we hosted a kaizen in our court facility in May which led to over $1 5 million doses of annual capacity improvement and cycle time reduction.

Jay Saccaro: Now, I'll pass it to Jay. We'll take us through the details of our second quarter performance. Jay?

Jay Saccaro: Thanks, Pete.

Speaker Change: Result of these actions adjusted gross margin increased to 100 basis to 110 basis points and adjusted EBIT margin grew 60 basis points through the first half of 2024.

Jay Saccaro: Let's start with our financial performance on slide four. To the second quarter of 2024, revenues of $4.8 billion were up 1% organically year-over-year. Recall this quarter's results compared to 9% growth in the second quarter of 2023, when we experienced easing supply chain constraints. As you can see from our filing this morning, the continued market headwinds in China impacted total company sales growth in the quarter by approximately 300 basis points, meaning global sales growth excluding China was approximately 4%. Organic quarters growth was solid, increasing 3% year over year, driven by strength in the US and rest of world. Excluding a 300 basis point impact of China on orders, order growth would have been 6%.

Jay: This is another great example of how lean enables us to increase our volume and expand margins.

Jay: <unk>.

Speaker Change: We're focused on permanent cost optimization actions that are resulting in ongoing cost savings. For example, we've consolidated more than 40 vendors supporting our applications to one vendor as we signed a managed service agreement that has resulted in more than $40 million of Andy.

Speaker Change: Gross margin was particularly strong in pdx with volume and stabilization of raw material costs and imaging gross margin expanded led by new product introductions.

Speaker Change: And our Pdx segment, we hosted a kaizen in our court facility in May which led to over $1 5 million doses of annual capacity improvements and cycle time reduction.

Jay: Savings.

Jay: As we exit TSA as we're developing solution specific to GE healthcare's needs.

Jay: For example, moving more to the cloud and reducing internal data centers as well as consolidating the number of devices. We use we expect this to drive an additional $20 million of savings in 2024.

Speaker Change: This is another great example of how lean enables us to increase our volume and expand margins.

Speaker Change: And we're.

Speaker Change: <unk> on permanent cost optimization actions that are resulting in ongoing cost savings. For example, we've consolidated more than 40 vendors supporting our applications to one vendor as we signed a managed service agreement that has resulted in more than $40 million of annual.

Jay: On the gross profit side, we drove mid single digit variable cost productivity across all segments in the quarter.

Jay Saccaro: Order's dollars continue to outpace sales, leading to a strong total company booked a bill of 1.06 times versus 1.04 times last year. As a reminder, equipment only booked a bill is higher than total company booked a bill. We edited the second quarter with a healthy backlog of $19 billion, including strong services growth. Adjusted even margin was 15.3%, up 60 basis points year over year, driven by continued improvement in gross margin with productivity and price. Second quarter adjusted EPS was $1.9% year over year, reflecting adjusted EBIT growth and lower interest expense. Precache flow was in line with our expectations and was negative due to the timing of certain payments.

Jay: In the second quarter, we invested more than $300 million in R&D growing 10% year over year, while expanding our margin.

Speaker Change: <unk>.

Speaker Change: As we exit TSA is we're developing solutions specific to GE healthcare's needs.

Jay: Recently introduced products with AI are driving higher margins now.

Speaker Change: For example, moving more to the cloud and reducing internal data centers as well as consolidating the number of devices. We use we expect this to drive an additional $20 million of savings in 2024.

Jay: Now I'll turn to segment performance, let's start with imaging on slide seven where we had flat organic revenue growth. This was against a difficult comparison to the prior year when sales were up 9% growth. In this segment was also impacted by China market headwinds.

Speaker Change: On the gross profit side, we drove mid single digit variable cost productivity across all segments in the quarter.

Jay: Segment EBIT margin was up 40 basis points year over year, we continue to make progress on enhancing gross margins through productivity and price. While also investing in R&D margin improved sequentially by 130 basis points versus the first quarter of 2024 due to volume leverage.

Speaker Change: In the second quarter, we invested more than $300 million in R&D growing 10% year over year, while expanding our margin.

Speaker Change: Recently introduced products with AI are driving higher margins now.

Jay Saccaro: On slide five, let's take a closer look at segment revenue performance for the second quarter. We saw a very strong PDS sales growth of 14% organically, aligned to global procedural demand. China market headwinds negatively impacted both our imaging and ultrasound segments. Service revenue on a reported basis increased 2%. We continue to make very good progress on margin expansion.

Speaker Change: Now I'll turn to segment performance, let's start with imaging on slide seven where we had flat organic revenue growth. This was against a difficult comparison to the prior year when sales were up 9% growth. In this segment was also impacted by China market headwinds.

Jay: New product introductions are contributing to particular strength in U S product demand.

Jay: Turning to ultrasound on slide eight organic revenue was down 1% year over year, primarily due to China market headwinds.

Jay: <unk> EBIT margin decreased 120 basis points year over year, driven by lower sales in China and inflation.

Speaker Change: Segment EBIT margin was up 40 basis points year over year, we continue to make progress on enhancing gross margins through productivity and price.

Jay: This was partially offset by cost productivity achieved through standardization and new product introductions.

Jay Saccaro: Let's walk through this on slide six. In the quarter, the adjusted gross margin expanded 110 basis points, and adjusted EBIT margin expanded 60 basis points. The team has made significant progress utilizing lean capabilities to focus on margin and creative actions. As a result of these actions, adjusted gross margin increased 100 basis points and adjusted EBIT margin grew 60 basis points through the first half of 2024. Gross margin was particularly strong in PDX with volume and stabilization of raw material costs. In imaging, gross margin expanded, led by new product introductions. In our PDX segment, we hosted a Kaizen in our court facility in May, which led to over 1.5 million doses of annual capacity improvement and cycle time reduction.

Speaker Change: We're also investing in R&D.

Speaker Change: Margin improved sequentially by 130 basis points versus the first quarter of 2024 due to volume leverage.

Jay: We continue to see solid customer demand, especially for our recently launched products.

Jay: Moving to patient care solutions on slide nine organic revenue was up 1% year over year following 9% growth in the prior year.

Speaker Change: New product introductions are contributing to particular strength in U S product demand.

Speaker Change: Turning to ultrasound on slide eight organic revenue was down 1% year over year, primarily due to China market headwinds.

Jay: Segment, EBIT margin decreased 90 basis points year over year due to product mix, while productivity actions offset inflation.

Speaker Change: <unk> EBIT margin decreased 120 basis points year over year, driven by lower sales in China and inflation.

Jay: With the expected contributions from new product introductions, and a healthy backlog, we are well positioned to drive future growth.

Speaker Change: This was partially offset by cost productivity achieved through standardization and new product introductions.

Jay: Moving to pharmaceutical diagnostics on slide 10, we had another strong quarter generating 14% year over year organic growth driven by volume pricing and new product introductions.

Speaker Change: We continue to see solid customer demand, especially for our recently launched products.

Speaker Change: Moving to patient care solutions on slide nine organic revenue was up 1% year over year following 9% growth in the prior year.

Jay: Segment EBIT margin of 31, 2% improved 450 basis points year over year, driven by sales volume productivity and pricing we're.

Speaker Change: Segment, EBIT margin decreased 90 basis points year over year due to product mix, while productivity actions offset inflation.

Jay: We're pleased with the continued margin expansion in this segment.

Jay Saccaro: This is another great example of how lean enables us to increase our volume and expand margins. In IT, we're focused on permanent cost optimization actions that are resulting in ongoing cost savings. For example, we have consolidated more than 40 vendors supporting our applications to one vendor, as we signed a managed service agreement that has resulted in more than 40 million dollars of annual savings.

Jay: Security of supply remains top of mind for our customers and we're continuing to make investments to enhance global supply of contrast agents and radiopharmaceuticals to meet increased demand in particular, we are encouraged by positive developments in the molecular imaging market we.

Speaker Change: With the expected contributions from new product introductions, and a healthy backlog, we are well positioned to drive future growth.

Speaker Change: Moving to pharmaceutical diagnostics on slide 10, we had another strong quarter generating 14% year over year organic growth driven by volume pricing and new product introductions.

Jay: We saw continued acceleration of <unk> dose is delivered in the U S. In the second quarter.

Speaker Change: Segment EBIT margin of 31, 2% improved 450 basis points year over year, driven by sales volume productivity and pricing we're.

Jay: These sales increased three fold.

Jay Saccaro: meetings. As we exit TSAs, we're developing solutions specific to GE HealthCare's needs. For example, moving more to the cloud and reducing internal data centers, as well as consolidating the number of devices we use. We expect this to drive an additional $20 million of savings in 2024. On the quarter. In the second quarter, we invested more than $300 million in R&D, growing 10% year-over-year while expanding our margin. Recently introduced products with AI are driving higher margins.

Jay: Turning to slide 11 on cash flow performance in the second quarter free cash flow was negative $182 million.

Speaker Change: We're pleased with the continued margin expansion in this segment.

Jay: Due to the normal timing of compensation and interest payments. We continue to expect strong cash generation for the full year free cash flow is expected to be substantially higher in the second half of the year relative to the FERC as a result of seasonality given higher volumes as well as the timing of certain supplier in comp.

Speaker Change: Security of supply remains top of mind for our customers and we're continuing to make investments to enhance global supply of contrast agents and radiopharmaceuticals to meet increased demand in particular, we are encouraged by positive developments in the molecular imaging market we.

Speaker Change: We saw continued acceleration of <unk> dose is delivered in the U S. In the second quarter.

Jay: Sensation payments that occur earlier in the year.

Jay: Our strong cash flow profile continues to provide us the flexibility to advance our growth strategy, while reinvesting in the business and executing a disciplined capital allocation strategy.

Speaker Change: These sales increased threefold.

Speaker Change: Turning to slide 11 on cash flow performance in the second quarter free cash flow was negative $182 million.

Speaker Change: Due to the normal timing of compensation and interest payments. We continue to expect strong cash generation for the full year free cash flow is expected to be substantially higher in the second half of the year relative to the FERC as a result of seasonality given higher volumes as well as the timing of certain supplier in <unk>.

Speaker Change: Now, let's turn to our outlook on slide 12, we're taking a prudent approach and are lowering our full year 2020 for organic revenue growth guidance to be in the range of 1% to 2% due to temporary market headwinds in China.

Jay Saccaro: Now, I'll turn to segment performance. Let's start with imaging on slide seven where we had flat organic revenue growth. This was against the difficult comparison to the prior year when sales were up 9%. Growth in the segment was also impacted by China, marked at headwinds. Segment EBIT margin was up 40 basis points year-over-year. We continue to make progress on enhancing gross margin through productivity and price, while also investing in R&D. Margin improves sequentially by 130 basis points versus the first quarter of 2024 due to volume leverage. New product introductions are contributing to particular strength in US product demand.

Jay: Spite this reduction we're raising our guidance for adjusted EBIT margin expansion, which we now expect to be 60 to 90 basis points year over year associated with the continued momentum we're seeing on productivity and optimization initiatives along with contribution from <unk>.

Speaker Change: Compensation payments that occur earlier in the year.

Speaker Change: Our strong cash flow profile continues to provide us the flexibility to advance our growth strategy, while reinvesting in the business and executing a disciplined capital allocation strategy.

Jay: We're reaffirming our expected our expectation for adjusted EPS in the range of $4 20.

Speaker Change: Now, let's turn to our outlook on slide 12.

Speaker Change: Taken a prudent approach and are lowering our full year 2020 for organic revenue growth guidance to be in the range of 1% to 2% due to temporary market headwinds in China.

Jay Saccaro: Turning to ultrasound on slide eight, organic revenue was down 1% year-over-year, primarily due to China marked at headwinds. Segment EBIT margin decreased 120 basis points year-over-year, driven by lower sales in China and inflation. This was partially offset by cost productivity achieved through standardization and new product introductions. We continue to see solid customer demand, especially for our recently launched products. Moving to patient care solutions on slide nine, organic revenue was up 1% year-over-year, following 9% growth in the prior year. Segment EBIT margin decreased 90 basis points year-over-year due to product mix, while productivity actions offset inflation.

Jay: To $4 35.

Jay: With growth of 7% to 11%.

Jay: And free cash flow of approximately $1 8 billion.

Jay: We expect third quarter year over year organic revenue growth of approximately 1% and adjusted EBIT margin expansion to be relatively similar to second quarter, we would expect year over year organic revenue growth and adjusted EBIT margin in the fourth quarter to be the highest of the year as you think about.

Speaker Change: Despite this reduction we're raising our guidance for adjusted EBIT margin expansion, which we now expect to be 60 to 90 basis points year over year associated with the continued momentum we're seeing on productivity and optimization initiatives along with contribution from <unk>.

Speaker Change: We're reaffirming our expected our expectation for adjusted EPS in the range of $4 20.

Jay: The year I would note that we expect the revenue headwind from foreign exchange to be less than 1% in 2024.

Speaker Change: To $4 35.

Speaker Change: With growth of 7% to 11%.

Jay: Now I'd like to turn the call back over to Pete.

Speaker Change: Free cash flow of approximately $1 8 billion.

Pete: Thanks, Jay building on my comments from earlier in the call. Our lean culture has allowed us to create a strong pipeline of innovation and accelerate our ability to bring differentiated solutions to market for patients and customers will dive deeper into some of what you see on the slide at Investor day, but today I would like to focus on.

Speaker Change: We expect third quarter year over year organic revenue growth of approximately 1% and adjusted EBIT margin expansion to be relatively similar to second quarter, we would expect year over year organic revenue growth and adjusted EBIT margin in the fourth quarter to be the highest of the year as.

Jay Saccaro: With expected contributions from new product introductions in a healthy backlog, we are well positioned to drive future growth. Moving to pharmaceutical diagnostics on slide 10, we had another strong order generating 14% year-over-year organic growth driven by volume pricing and new product introductions. Segment EBIT margin of 31.2% improved 450 basis points year-over-year, driven by sales volume productivity and pricing. We're pleased with the continued margin expansion in this segment. Security of supply remains top of mind for our customers, and we're continuing to make investments to enhance global supply of contrast agents and radiopharmaceuticals to meet increased demand.

Pete: Growth in Pdx and imaging.

Speaker Change: As you think about the year I would note that we expect the revenue headwind from foreign exchange to be less than 1% in 2024.

Speaker Change: We're encouraged by the recent CMS reimbursement proposal and its potential to benefit patients in the U S are facing cancer cardiovascular and neurological diseases.

Speaker Change: Now I'd like to turn the call back over to Pete.

Speaker Change: This step is expected to unlock the value of our radiopharmaceuticals and pet and spec scanners, ultimately, enabling more precise diagnostic and treatment planning for patients to give you. Some perspective for the last decade. These molecular imaging agents were treated as a supply with limited reimbursement.

Jay Saccaro: In particular, we're encouraged by positive developments in the molecular imaging market. We saw a continued acceleration of visible doses delivered in the U.S. in the second quarter. These sales increased threefold.

Speaker Change: <unk>, which prevented broad scale use assuming the new rule goes into effect on January one 2025, we expect CMS will begin paying market value for these agents some of which have an average sale price of thousands of dollars.

Jay Saccaro: Turning to slide 11 on cashflow performance in the second quarter, free cashflow was negative $182 million due to the normal timing of compensation and interest payments. We continue to expect strong cash generation for the full year. Free cashflow is expected to be substantially higher in the second half of the year relative to the first as a result of seasonality, even higher volumes, as well as the timing of certain supplier and compensation payments that occur earlier in the year. Our strong cashflow profile continues to provide us the flexibility to advance our growth strategy while reinvesting in the business and executing a discipline capital allocation strategy.

Speaker Change: The change will give hospitals the needed reimbursement to cover their costs better which.

Speaker Change: Which has been a long standing challenge in this space.

Speaker Change: This comes at a time, when we continue to see momentum with existing radiopharmaceuticals, including that scan visible and sorry Ana.

Speaker Change: And the promise of future molecules, such as flip paradigms for cardiovascular disease.

Jay: We expect each of these products will benefit from the new reimbursement rule.

Jay: As Jay mentioned <unk> doses continued to grow in the second quarter in the U S. With the recent FDA approval of Donato Mountain, we anticipate even further uptick of our diagnostic amyloid pet agent.

Jay Saccaro: Now let's turn to our outlook on Slide 12. We're taking a prudent approach and are lowering our full year 2024 organic revenue growth guidance to be in the range of 1 to 2 percent due to temporary market headwinds in China. Despite this reduction, we're raising our guidance for adjusted EBIT margin expansion, which we now expect to be 60 to 90 basis points year over year, associated with the continued momentum we're seeing, productivity and optimization initiatives, along with contribution from MPIs. We're reaffirming our expectation for adjusted EPS in the range of $4.20 to $4.35, with growth of 7 to 11 percent and free cash flow over approximately $1.8 billion.

Speaker Change: This is still a small contributor to sales growth, but gives us optimism about its sales potential over the next few years.

Speaker Change: At a time when we continue to see momentum with existing radiopharmaceuticals, including that scanner visible and sorry Ana.

Jay: On the equipment side of pet imaging, we expanded our upgradable omni legend platform by introducing smaller detector, providing upgrade ability and value.

Speaker Change: And the promise of future molecules, such as flipper it adds for cardiovascular disease.

Speaker Change: We expect each of these products will benefit from the new reimbursement rule.

Jay: So customers can adopt the scanner to meet the evolving needs of their patients.

Speaker Change: As Jay mentioned <unk> doses continued to grow in the second quarter in the U S. With the recent FDA approval of <unk>, we anticipate even further uptick of our diagnostic amyloid pet agent.

Speaker Change: We also introduced many trades magni, a small low cost cyclotron for in house production of tracers and radioisotopes and this will help regional hospitals with limited access to commercial distribution, where larger hospitals was citing issues that prevent them from building the infrastructure needed to accommodate.

Speaker Change: This is still a small contributor to sales growth, but gives us optimism about its sales potential over the next few years.

Jay: A traditional sized cyclotron.

Speaker Change: On the equipment side of pet imaging, we expanded our upgradable omni legend platform by introducing a smaller detector, providing upgrade ability and value.

Jay: Turning to slide 14.

Jay Saccaro: We expect third quarter year-over-year organic revenue growth and adjusted EBIT margin expansion to be relatively similar to second quarter. We would expect year-over-year organic revenue growth and adjusted EBIT margin in the fourth quarter to be the highest of the year. As you think about the year, I would note that we expect the revenue headwind from four in exchange to be less than 1 percent in 2024.

Jay: We're aligning our ultrasound and image guided therapy business to better position ourselves for how clinicians use these two modalities and hydro settings. For example, you can see how multiple products work in conjunction inside an electrophysiology suite and with integrated in the workflow create a better experience for our.

Speaker Change: Customers can adopt the scanner to meet the evolving needs of their patients.

Speaker Change: We also introduced many trades magnet a small low cost cyclotron for in house production of tracers and radioisotopes and this will help regional hospitals with limited access to commercial distribution or larger hospitals was citing issues that prevent them from building the infrastructure needed to accommodate.

Speaker Change: <unk> patients. These two businesses combined unlock more value than they do separate.

Jay: We look we're looking forward to sharing more about this at Investor day.

Peter Arduini: Now, I'd like to turn the call back over to Pete. Thanks, Jay. Building up my comments from earlier in the call, our lean culture has allowed us to create a strong pipeline of innovation and accelerate our ability to bring differentiated solutions to market for patients and customers.

Speaker Change: A traditional sized cyclotron.

Speaker Change: Turning to slide 14.

Jay: We also made strategic leadership appointments aligned to these changes as of July one rolling Rod our previous head of ultrasound is leading imaging and fill Radcliffe head of image guided therapies is leading ultrasound and IGT rolling infill of deep industry knowledge.

Speaker Change: We're aligning our ultrasound and image guided therapy business to better position ourselves for how clinicians use these two modalities and hydro settings. For example, you can see how multiple products work in conjunction inside and electrophysiology suite and with integrated in the workflow create a better experience for our.

Peter Arduini: We'll dive deeper into some of what you see on the slide at Investor Day, but today I'd like to focus on growth and PDX and imaging. We're encouraged by the recent CMS reimbursement proposal and its potential to benefit patients in the U.S. were facing cancer, cardiovascular, and neurological diseases. This step is expected to unlock the value of our radio pharmaceuticals and PET and SPECT scanners, ultimately enabling more precise diagnostic and treatment planning for patients. To give you some perspective, for the last decade, these molecular imaging agents were treated as a supply with limited reimbursement, which prevented broad scale use, assuming the new role goes into effect on January 1st of 2025.

Speaker Change: Global mindset and significant expertise with our products and operations.

Speaker Change: <unk> patients. These two businesses combined unlock more value than they do separate.

Speaker Change: They are well positioned to lead our two largest businesses and are off to a great start.

Speaker Change: We look we're looking forward to sharing more about this at Investor day.

Speaker Change: Before turning to Q&A on slide 15, I want to thank our team for their commitment to delivering for our customers in particular I'd like to thank our government affairs and policy team, who advocated for multiple years. The proposed CMS hospital outpatient rule for the benefit of patients.

Speaker Change: We also made strategic leadership appointments aligned to these changes as of July one Roland Rod our previous head of ultrasound is leading imaging and fill Radcliffe head of image guided therapy.

Jay: As I look ahead I'm optimistic for a few reasons one we have a strong backlog at $19 billion and with a prudent approach to our revenue guidance, we feel confident that we can deliver on our outlook.

Speaker Change: As leading ultrasound and IGT rolling infill have deep industry knowledge global mindset and significant expertise with our products and operations.

Peter Arduini: We expect CMS will begin paying market value for these agents. Gates, some of which have an average sale price of thousands of dollars. The change will give hospitals the needed reimbursement to cover their cost better, which has been a long-standing challenge in the space. This comes at a time when we continue to see momentum with existing radiopharmaceuticals, including Dad Scan, Gizmo, and Seriana, and the promise of future molecules such as Flapered Ads for cardiovascular disease. We expect each of these products will benefit from the new reimbursement rule. As Jay mentioned, Vizamel Dosis continued to grow in the second quarter in the U.S.

Speaker Change: And they are well positioned to lead our two largest businesses and are off to a great start.

Speaker Change: <unk> by overall capital equipment spend, particularly in the U S. We delivered solid orders growth in the quarter at 3% or 6% excluding China.

Jay: Our funnel of productivity opportunities is strong and we were able to raise our adjusted EBIT margin guidance due to our progress on these initiatives and there is still much more to do here.

Speaker Change: We're excited about the pipeline of innovation, we have that solves customer challenges enables improved patient care and sets us up well for growth in the years to come more about this in November at our Investor Day, and lastly, given these factors we're confident that we can deliver on our medium term goals with that wed like to open up.

Speaker Change: As I look ahead I'm optimistic for a few reasons one we have a strong backlog at $19 billion and with a prudent approach to our revenue guidance, we feel confident that we can deliver on our outlook for.

Speaker Change: We're encouraged by overall capital equipment spend particularly in the U S. We delivered solid orders growth in the quarter at 3% or 6%, excluding China are.

Jay: For questions.

Jay: Thank you Pierre I would like to ask participants to please limit yourself to one question and one follow up operator can you. Please open the line.

Peter Arduini: With the recent FDA approval of Denonimum, we anticipate an even further uptick of our diagnostic MOIDPET agent. This is still a small contributor to sales growth, but gives us optimism about itself's potential over the next few years. On the equipment side of PET imaging, we expanded our upgradable Omni-Legend platform by introducing a smaller detector, providing upgradability and value. So customers can adapt the scanner to meet the evolving needs of their patients. We also introduce Mini Trace Magni, a small, low-cost cyclotron for in-house production of tracers and radioisotopes. And this will help regional hospitals with limited access to commercial distribution or larger hospitals with citing issues that prevent them from building the infrastructure needed to accommodate a traditional side cyclotron.

Speaker Change: Our funnel of productivity opportunities is strong and we were able to raise our adjusted EBIT margin guidance due to our progress on these initiatives and there is still much more to do here.

Speaker Change: Thank you and as a reminder, that is star one line. If you do have a question and wait for your name to the E and M.

Speaker Change: Excited about the pipeline of innovation, we have that solves customer challenges enables improved patient care and sets us up well for growth in the years to come.

Speaker Change: To remove yourself. Please press star one again, our first question is from Joanna <unk> with Citi. Please proceed.

Speaker Change: More about this in November at our Investor Day, and lastly, given these factors we're confident that we can deliver on our medium term goals with that wed like to open up for questions.

Joanna <unk>: Good morning, and thank you for taking the question.

Speaker Change: You want to spend my question on China.

Joanna: Im trying to understand how you think about the pace of opening up.

Speaker Change: Thank you Pierre I would like to ask participants to please limit yourself to one question and one follow up operator can you. Please open the line.

Speaker Change: New orders from the stimulus program when do you anticipate it arriving and how as you put our 2025 models together do you think about this rolling into next year.

Peter: Hey, John it's Peter Thanks for the question.

Speaker Change: So as I mentioned in my prepared remarks stimulus program rollout in the details of those plans are taking longer than we estimated I think many people estimated.

Peter Arduini: Turning to slide 14, we're aligning our ultrasound and image-guided therapies business to better position ourselves for how clinicians use these two modalities in how multiple products work in conjunction inside an electrophysiology suite, and what integrated in the workflow create a better experience for our customers and patients. These two businesses combined unlock more value than they do separate. We're looking forward to sharing more about this at Investor Day. We also made strategic leadership appointments aligned to these changes. As of July 1st, Roland Rodd, our previous head of ultrasound, is leading Imaging. And Phil Radcliffe, head of image-guided therapies, is leading ultrasound in IGT.

Speaker Change: Just some background in 2000.

Peter: 'twenty two when there was a previous rollout just from the central government. It came out pretty quickly I think it was around under six months from announcement to rollout that was kind of a predicate we based assumptions on in 'twenty for the rollouts, taking longer mainly because it's a combination of each of the 31 provinces in the central.

Peter: Government working together and so that.

Peter: It's taking longer to roll it out and we believe that that's going to be well into <unk>.

Peter: Late 'twenty four before begins driving growth. So we've fundamentally taken that out of our numbers. We ultimately expect that this is going to be a positive catalyst for the China market and we believe it could have a positive impact on orders starting in late 'twenty four but we view this as limited sales.

Peter Arduini: Roland Phil, a deep industry knowledge, global mindset, and significant expertise with our products and operations. And they're well positioned to lead our two largest businesses and are off to a great start.

Peter: <unk> just on the time between tenders orders and sales to take place and so taking it out of our numbers for the year, we viewed as prudent.

Peter Arduini: Before turning to Q&A on slide 15, I want to thank our team for their commitment to delivering for our customers. In particular, I'd like to thank our government affairs and policy team who advocated for multiple years the proposed CMS hospital outpatient rule for the benefit of patients. As I look ahead, I'm optimistic for a few reasons. One, we have a strong backlog at $19 billion. And with a prudent approach to our revenue guidance, we feel confident that we can deliver on our outlook. We're encouraged by overall capital equipment spend, particularly in the U.S. We delivered solid orders growth in the quarter at 3%, or 6% excluding China.

Joe: But again, we would expect to see the benefit of stimulus, having an impact in 'twenty five and obviously when it does come forward, we will take advantage of it Joe you may want to add a few comments, yes sure just a little more detail on this adjustment when we provided guidance last quarter, we were estimating roughly a $50 million.

Speaker Change: We expect that this is going to be a positive catalyst for the China market and we believe it could have a positive impact on orders starting in late 'twenty four but we view this as limited sales impact just on the time between tenders orders and sales to take place and so taking it out of our numbers for the year, we viewed as <unk>.

Speaker Change: Line in sales in the second quarter.

Joe: We actually saw something worse than that was closer to $100 million.

Joe: And so in fact as we look at the first half of the year you can see in our disclosures China is down about 15%.

Peter Arduini: Our funnel of productivity opportunities is strong, and we were able to raise our adjusted even margin guidance due to our progress on these initiatives, and there's still much more to do here. We're excited about the pipeline of innovation. We have the source customer challenges, enables improved patient care, and sets us up well for growth in the years to come. More about this in November at our Investor Day. And lastly, given these factors, we're confident that we can deliver on our medium-term goals.

Speaker Change: Prudent.

Speaker Change: And we've assumed really as we look to the rest of the year theres going to be no real impact from China's stimulus sales and also we're kind of expecting a challenging market for the balance of the year and so when you think about the guidance adjustment that we did as it relates to <unk> 24 at the midpoint of.

Jay: But again, we would expect to see the benefit of stimulus, having an impact in 'twenty five and obviously when it does come forward, we will take advantage of it Jay you may want to add a few comments, yes sure just a little more detail on this adjustment when we provided guidance last quarter, we were estimating roughly a $50 million.

Speaker Change: The range of the 1% to 2% range, it's roughly a $500 million impact in China relative to what we previously thought.

Klein: Klein in sales in the second quarter, but we actually saw something worse than that closer to $100 million.

Operator: With that, we'd like to open up for questions. Thank you, Peter. I'd like to ask participants to please limit yourself to one question and one follow-up.

Speaker Change: When China starts stimulus starts to come through it will be a positive development, but we're not trying to time this or estimate the timing of of the stimulus package. We've taken it out on the positive side. We do believe that we are well positioned once stimulus starts coming through to take advantage of that as pizza.

Jay: So in fact, as we look at the first half of the year you can see in our disclosures China is down about 15%.

Operator: Operator, can you please open the line? Thank you, and as I remind her, that is star 11 if you do have a question and wait for your name to be announced. To remove yourself, please press star 11 again.

Speaker Change: So overall, we think we think the market is a good long term attractive market, but clearly this year is challenging the only thing I would say, it's historically China has been around for last year's roughly 14% of our business. It will be much less than that this year in the 11% to 12% range as we think about our current.

Speaker Change: So when you when you think about the guidance adjustment that we did as it relates to two four at the midpoint of the range of the 1% to 2% range, it's roughly a $500 million impact in China relative to what we previously thought.

John Lunch: Our first question is from John Lunch.

Peter Arduini: Could Citi please proceed? Good morning, and thank you for taking the question. I think I want to spend my question on China and trying to understand how you think about the pace of opening up new orders from the stimulus program, when you anticipate it, you know, arriving and how, as we put our 2025 models together, you think about this rolling into next year. Thank you. But, John, it's Peter. Thanks for the question. So, as I mentioned in my prepared remarks, you know, the stimulus program rollout and the details of those plans are taking longer than we estimate, I think, than many people estimated.

Speaker Change: Modeling.

Speaker Change: Thank you.

Speaker Change: On the positive side, we do believe that we are well positioned once stimulus starts coming through to take advantage of that as Pete said. So overall, we think we think the market is a good long term attractive market, but clearly this year is challenging.

Speaker Change: Our next question comes from the line of Larry bigger fan with Wells Fargo. Please proceed.

Speaker Change: Good morning, Thanks for taking the question.

Speaker Change: I wanted to start with the 24 guidance Jay as you mentioned and you lowered revenues by about $500 million, but maintain margins actually increased margins a little bit of maintained EPS. So my question is how are you able to maintain margins and EPS given the revenue reduction I did have one follow up.

Pete: Only thing I would say is historically, China has been around for last year's roughly 14% of our business. It will be much less than that this year in the 11% to 12% range as we think about our current modeling.

Peter Arduini: Just some background: in 2022, when there was a previous rollout just from the central government. It came out pretty quickly. I think it was around under six months from announcement to rollout. That was kind of the predicate we based assumptions on. In 24, the rollouts taking longer, mainly because it's a combination of each of the 31 provinces and the central government working together. And so that's taking longer to roll it out. And you know, we believe that that's going to be well into late 24 before begins driving growth. So we've fundamentally taken that out of our numbers.

Speaker Change: Great.

Larry: Thanks, Larry.

Speaker Change: So look I think you heard in our prepared remarks, a lot of emphasis on.

Speaker Change: Thank you.

Lawrence H. Biegelsen: Our next question comes from the line of Larry <unk> with Wells Fargo. Please proceed.

Larry: Zen on lean culture on cost initiatives.

Speaker Change: We're really proud of that and I would say that that is the thing that has exceeded our expectations as we look at the bottom line throughout the year, we delivered 60 basis points of margin in the first half of the year against very low revenue growth and.

Lawrence H. Biegelsen: Good morning, Thanks for taking the question.

Larry: I wanted to start with the 24 guidance you know Jay as you mentioned and you lowered revenues by about $500 million, but maintain margins actually increased margins a little bit of maintain EPS. So my question is how are you able to maintain margins and EPS given the revenue reduction I did have one follow up.

Speaker Change: And in fact, we had a really good gross margin contribution year over year 120 basis points in the first half of the year and in the second quarter. The formula that we've talked about historically is one that we really delivered on we had roughly one point of positive impact in price exactly where we hope to be and then notably.

Jay Saccaro: We ultimately expect that this is going to be a positive catalyst for the China market. And we believe it could have a positive impact on orders starting in late 24. But we view this as limited sales impact just on the time between tenders, orders, and sales to take place. And so, taking it out of our numbers for the year, we viewed as prudent. But again, we would expect to see the benefit of stimulus having an impact in 25. And obviously, when it does come up, we'll take advantage of it.

Lawrence H. Biegelsen: Great.

Larry: Thanks, Larry.

Speaker Change: So look I think you heard in our prepared remarks, a lot of emphasis on.

Larry: Hi, Jen on lean culture on cost initiatives.

Speaker Change: Our variable cost productivity initiatives, and we talked a little bit about that more than offset inflation and then you saw highlights from some of the G&A initiatives really proud of the work that our team is undertaking but some of those initiatives also contributed in the second quarter. So what happens in the back half of the year is more of the <unk>.

Jay Saccaro: Jay, you may want to add a few comments. Yeah, sure. Just a little more detail on this adjustment. When we provided guidance last quarter, we were estimating roughly a 50 million decline in sales in the second quarter. But we actually saw something worse than that. It was closer to $100 million. And so, in fact, as we look at the first half of the year, you can see in our disclosures, China's down about 15%. And we've assumed, really, as we look to the rest of the year, there's going to be no real impact from China's stimulus sales.

Speaker Change: Same.

Speaker Change: In the third quarter, we will see similar margin expansion to what we saw in Q2 and then in the fourth quarter at the midpoint of the range. There is some tick up or uptake I should say in margin expansion.

Speaker Change: And it's going to come through continued price some of these productivity initiatives offsetting inflation and these cost initiatives that we've had success and then I would also note that in the fourth quarter of last year, we had around 40 basis points of onetime R&D items, we don't expect to repeat so really that's the contours of the year as we think about <unk>.

Speaker Change: Our variable cost productivity initiatives, and we talked a little bit about that more than offset inflation.

Speaker Change: Then you saw highlights from some of the G&A initiatives really proud of the work that our team is undertaking but some of those initiatives also contributed in the second quarter. So what happens in the back half of the year is more of the same.

Jay Saccaro: And also, we're kind of expecting a challenging market for the balance of the year. And so when you think about the guidance adjustment that we did as it relates to 24, at the midpoint of the range of the one to two percent range, it's roughly a $500 million impact in China relative to what we previously thought. When China starts, stimulus starts to come through; it will be a positive development. But we're not trying to time this or estimate the timing of the stimulus package. We've taken it out. On the positive side, we do believe that we are well positioned.

Speaker Change: Margin improvement.

Speaker Change: The one thing I would say is at the beginning of the year, we were cautious and we did risk adjust some of these productivity initiatives and some of these cost containment initiatives. So the question how do you offset $500 million, it's real execution against these initiatives delivering incremental profit.

Speaker Change: Versus our expectations I think it's a <unk>.

Speaker Change: Companywide effort, it's highlighted by things like Kaizen initiative week that we had last week, but overall feel very good about the margin trajectory.

Jay Saccaro: One stimulus starts coming through to take advantage of that, as Pete said. Overall, we think the market is a good long-term, attractive market, but clearly this year is challenging. The only thing I would say is, historically, China has been around, or last year's roughly 14% of our business. It will be much less than that this year, in the 11 to 12 percent range, as we think about our current modeling. Thank you.

Speaker Change: That's helpful and Pete or Jay I heard your comments about confidence in.

Speaker Change: Margin improvement.

Speaker Change: The medium term goals any high level thoughts right now on 2025.

Speaker Change: Do you expect some catch up from China next year.

Speaker Change: Still confident in the mid single digits.

Speaker Change: <unk> growth.

Speaker Change: Thank you.

Speaker Change: Yeah, Larry Thanks for the question so as I mentioned in my closing comments that we feel confident in our midterm medium term goals that we've laid out both are our revenue and our profit goals profit obviously for the reasons that Jay laid out and really I would say on the growth side.

Speaker Change: Versus our expectations I think it's a companywide effort, it's highlighted by things like Kaizen initiative week that we had last week, but overall feel very good about the margin trajectory.

Larry Biegelsen: Our next question comes from the line of Larry Biegelsen with Wells Fargo; please proceed. Good morning. Thanks for taking the question. I wanted to start with the 24 guidance. You know, Jay, as you mentioned, you lowered revenues by about $500 million, but maintained margins; actually increased margins a little bit and maintained EPS. So my question is how are you able to maintain margins and EPS given the revenue reduction?

Speaker Change: That's helpful and Pete or Jay I heard your comments about confidence in.

Speaker Change: We don't know what value China is going to create in 2025, obviously, it's probably going to be more than we had previously expected want to see how that shakes out and it's it's not time to give guidance on that but that clearly will be a positive, but it's less about markets in my mind, it's more about the core changes we've made and the company are.

Speaker Change: The medium term goals any high level thoughts right now on 2025.

Speaker Change: Do you expect some catch up from China next year.

Speaker Change: Still confident in the mid single digit.

Speaker Change: If it grows out.

Speaker Change: Thank you.

Larry Biegelsen: I did have one follow up.

Speaker Change: Yeah, Larry Thanks for the question so as I mentioned in my closing comments that we feel confident in our midterm medium term goals that we've laid out both our revenue and our profit goals profit obviously for the reasons that Jay laid out and really I would say on the growth side.

Jay Saccaro: Great. Thanks, Larry. So look, I think you heard in our prepared remarks. A lot of emphasis on high zen on lean culture, on cost initiatives. I mean, we're really proud of that. And I would say that that is the thing that has exceeded our expectations as we look at the bottom line throughout the year. We delivered 60 basis points of margin in the first half of the year against very low revenue growth. And in fact, we had a really good gross margin contribution year of year, 120 basis points in the first half of the year.

Speaker Change: <unk> execution on large integrated deals our capability to be able to sell more value get price be able to actually bring out new products that bring differentiated capabilities I just feel good about the hand, we're holding right now as we kind of finished this year out and move into.

Speaker Change: So not only just 25 up beyond again, just to make another comment relative to our Investor day in November it will be our first as an independent company. We wanted to really highlight the products that we've been building behind the scenes with this increased R&D investment remember we have stepped up our percentage of R&D a couple of points over the last few years and so.

Jay Saccaro: And in the second quarter, the formula that we've talked about historically is one that we really delivered on. We had roughly one point of positive impact in price exactly where we hope to be. And then notably, our variable costs productivity initiatives. And we talked a little bit about that more than offset inflation. And then you saw highlights from some of the GNA initiatives, really proud of the work that our IT team is undertaking. But some of those initiatives also contributed in the second quarter. So what happens in the back half of the year is more of the same.

Speaker Change: <unk> in Cte and pet CET and monitoring and ultrasound all of our business areas, we've been investing in the pharmaceutical diagnostic or a new molecules coming out so we want to be able to tell that story.

Speaker Change: So I feel good about the position that we're in and.

Speaker Change: Again looking forward here to kind of delivering on our plans for the year and being in a well positioned over the next couple of years to continue to grow the company.

Jay Saccaro: And the third quarter, we'll see similar margin expansion to what we saw in Q2. And then in the fourth quarter, you know, at the midpoint of the range, there is some tick up, or up tick, I should say, in margin expansion. And it's going to come through continued price. Some of these productivity initiatives offset inflation, and these cost initiatives that we've had success.

Speaker Change: Thanks, a lot.

Speaker Change: Thank you. Our next question comes from the line of Anthony Petrone with Mizuho group.

Anthony Petrone: Thanks, maybe two part question here, one is going to be on.

Speaker Change: Orders and bookings and then the second will be an all comers disease. So the order number plus 3% and book to Bill 1.06.

Jay Saccaro: And then I would also note that in the fourth quarter of last year, we had around 40 basis points of one-time R&D items. We don't expect to repeat. So really, that's the contours of the year as we think about margin improvement. The one thing I would say is, at the beginning of the year, we were cautious. And we did risk-adjust some of these productivity initiatives and some of these cost containment initiatives. So the question, how do you offset $500 million? It's real execution against these initiatives delivering incremental profit versus our expectations. I think it's a company-wide effort.

Speaker Change: It comes in despite the headwinds in China, and I think a lot of that has to do with just the state of the U S market. So maybe just a little bit on the U S market as it relates to funnel specifically in the imaging and ultrasound segments.

Speaker Change: How much visibility visibility is there.

Ken: And Ken this feasibly extend into 2025, and then for all Simers disease.

Speaker Change: There's a couple of blood based tests that had results out recently clearly visit mill is at least in the early innings here a preferred imaging solution to onboard all summers disease patients. So how does all summers disease play out from the <unk> side, when we consider new tests potentially coming in thanks.

Speaker Change: Is it going to be on.

Speaker Change: Orders and bookings and then the second will be on all summers disease. So the order number plus 3% and book to Bill 1.6.

Jay Saccaro: It's highlighted by things like Kaizen Initiative Week that we had last week. But overall, it feels very good about the margin trajectory.

Speaker Change: It comes in despite the headwinds in China, and I think a lot of that has to do with just state of the U S market. So maybe just a little bit on the U S market as it relates to funnel specifically in the imaging and ultrasound segments, how much visibility visibility is there and can this feasibly exceed.

Larry Biegelsen: That's helpful. And Pete or Jay, you know, I heard Pete, your comments about, you know, confidence in the medium term goals. Any high level of thoughts right now on 2025, you know, do you expect some ketchup from China next year? And you know, are you still confident in the mid-single-digit growth outlook? Thank you. Hey, Larry. Thanks for the the question.

Speaker Change: Maybe I'll, maybe I'll start with that and then turn it over to Pete for some additional color on orders in the Alzheimer's question.

Speaker Change: The 3% orders growth in the face of a decline in China I thought it was a really good result orders, excluding China were 6% and the book to Bill as you pointed out actually the book to Bill for the quarter of $1 <unk> I think was the highest since we've spun off.

Speaker Change: Turned into 2025, and then for all Simers disease.

Speaker Change: There's a couple of blood based tests that had results out recently clearly visit mill is at least in the early innings here of preferred imaging solution to onboard all summers disease patients. So how does all summers disease play out from the pet side, when we consider new tests potentially coming in thanks.

Peter Arduini: So, as I mentioned, you know, in my closing comments that we feel confident in our mid-term medium-term goals that we've laid out, both our revenue and our profit goals. Profit, obviously, for the reasons that Jay laid out. And really, I would say on the growth side, you know, we don't know what value China is going to create in 2025. Obviously, it's probably going to be more than we had previously expected. We'll have to see how that shakes out. And it's not time to give guidance on that, but that clearly will be a positive. But I, you know, it's less about markets in my mind.

Speaker Change: In the U S. We had a very strong quarter, we saw strong orders and sales growth and frankly in each of the segments orders growth outpaced sales growth in the U S. So really really nice market. There the market continues to be robust, we're seeing pdx, putting very solid.

Speaker Change: Maybe I'll, maybe I'll start with that and then turn it over to Pete for some additional color on orders in the Alzheimer's question.

Speaker Change: The 3% orders growth in the face of a decline in China I thought was a really good result orders, excluding China were 6% and the book to Bill as you pointed out actually the book to Bill for the quarter of $1. Six I think was the highest since we've spun off.

Speaker Change: Numbers up in line with procedure growth.

Speaker Change: And as we as you know we do a quarterly survey and then we also do work looking at all of the surveys out there in particular with respect to the U S.

Peter Arduini: It's more about the core changes we made in the company. Our commercial execution on large integrated deals, our capability to be able to sell more value, get price, be able to actually bring out new products that bring differentiated capabilities. I just feel good about the hand we're holding right now as we, you know, kind of finish this year out and move into not only just 25, but beyond.

Speaker Change: And many of our customers are telling us and those surveys they plan to spend more on capital investments in the second half. So I think that's a really good backdrop as we look to deliver on the guidance that we've just shared we're seeing growth in the equipment market in the U S. And we also feel very good about the share position that we've had we have we launched a number.

Speaker Change: In the U S. We had a very strong quarter, we saw strong orders and sales growth in.

Speaker Change: Frankly in each of the segments orders growth outpaced sales growth in the U S. So.

Speaker Change: So really really nice market there the market continues to be robust.

Speaker Change: New products in ultrasound and so we're seeing.

Speaker Change: We're seeing pdx, putting very solid numbers up in line with procedure growth.

Peter Arduini: And again, just to make another comment relative to our Investor Day in November, it'll be our first as an independent company. We want to really highlight the products that we've been building behind the scenes with this increased R&D investment. Remember, we've stepped up our percentage of R&D a couple of points over the last few years. And so in MR, in CT and PET CT, and monitoring and ultrasound, all of our business areas, we've been investing in the pharmaceutical diagnostic area and new molecules coming out. So we want to be able to tell that story. And so I feel good about the position that we're in.

Speaker Change: Real receptivity to some of the new products that we have in place so overall.

Speaker Change: And as we as you know we do a quarterly survey and then we also do work looking at all of the surveys out there in particular with respect to the U S.

Speaker Change: We feel quite good about the U S market, we feel good about the orders backdrop and then the other points I would note is backlog is up sequentially $300 million.

Speaker Change: In that range at $19 billion. So we're keeping the backlog at the level that we'd like to as we continue to grow grow the business Pete what would you add to that.

Speaker Change: Growth in the equipment market in the U S and we also feel very good about the share position that we've had we have we launched a number of new products and ultrasound. So we're seeing real receptivity to some of the new products that we have in place. So overall, we feel quite good about the U S market, we feel good about the orders back.

Pete: No I think you've covered it J, but we just I think a train in the U S team just had a phenomenal quarter.

Pete: And it is about products, but it is about we've talked about the team itself.

Peter Arduini: And, you know, we're, again, looking forward here to kind of delivering on this, our plans for the year and being in a well position over the next couple of years to continue to grow the company.

Pete: Talent upgrades that we put in place the new sales disciplines and processes and really our enterprise value proposition that we bring to our big IGN, we had quite a few larger wins.

Speaker Change: Drop and then the other points I would note is backlog is up sequentially $300 million in that range at $19 billion. So we're keeping the backlog at the level that we'd like to as we continue to grow grow the business on Pete.

Anthony Petrone: Thank you. Our next question comes from the line of Anthony Petrone with Mizuho Group. The US market, so maybe just a little bit on the US market as it relates to funnel specifically in the imaging and ultrasound segments. How much visibility is there, and can this feasibly extend into 2025? And then for Alzheimer's disease, there's a couple of blood-based tests that had results out recently. Clearly, Vizamel is at least in the early innings here, a preferred imaging solution to onboard Alzheimer's disease patients. So how does Alzheimer's disease play out from the PET CT side when we consider new tests potentially coming in?

Speaker Change: And again I'd, even cite some new product areas like in the vascular library, where we're winning.

Speaker Change: And the IGT business and taking share that we havent realistically in previous years, but.

Speaker Change: What would you add to that yes.

Pete: No I think you've covered a J, but we just I think a train in the U S team just had a phenomenal quarter.

Speaker Change: It's an older installed base in the United States. So we think we actually have a pretty good.

Speaker Change: Placement cycle, that's going to continue on a signal.

Pete: And it is about products, but it is about we've talked about team itself.

Speaker Change: Signals from our customers, particularly Cfos that we survey and such are positive about the investments and the way. This works out is when you see big growth and a lot of the med Tech <unk> businesses catheters and such are in the pharma side ultimately that puts more pressure to buy more equipment, because youre, putting more patients through the system. So.

Pete: Talent upgrades that we put in place the new sales disciplines and processes and really our enterprise value proposition that we bring to our big IGN.

Pete: Quite a few larger wins.

Speaker Change: And again I'd, even cite some new product areas like in the vascular library, where we're winning.

Speaker Change: We see that in delay coming through but are quite quite confident about how we see the U S market Anthony in your question on the radiopharmaceutical side.

Speaker Change: Growth in the IGT business and taking share that we havent realistically in previous years, but.

Speaker Change: It's an older installed base in the United States. So we think we actually have a pretty good.

Speaker Change #147: I think we're going to see a lot of different diagnostics pop up in many of these different phases.

Speaker Change: Placement cycle, that's going to continue on.

Speaker Change: Signals from our customers, particularly CFO that we survey and such are positive about the investments in the.

Speaker Change: How well they'll be accepted and integrated into into practice I think remains to be seen I think as it relates to Alzheimers, specifically I think all the baseline tests were done off of pad, the pre and post being able to actually see where the amyloid beta is actually see the elimination of it on scans.

Jay Saccaro: Thanks.

Jay Saccaro: Maybe I'll start with that and then turn it over to P for some additional color on orders and the Alzheimer's question. Look, the 3% orders growth in the face of a decline in China. I thought was a really good result. Or is excluding China or 6%. And the book to bill, as you point out, actually the book to bill for the quarter of 1.06, I think was the highest since we've spun off. In the US, we had a very strong quarter. We saw a strong orders and sales growth. And frankly, in each of the segments, orders growth outpaced sales growth in the US.

Speaker Change: The way. This works out is when you see big growth and a lot of the med Tech global businesses catheters and sites are in the pharma side ultimately that puts more pressure to buy more equipment, because youre, putting more patients through the system. So we see that in delay.

Speaker Change: We believe is going to still be a hallmark of.

Anthony: Coming through but are quite quite confident about how we see the U S market Anthony in your question on the radiopharmaceutical side.

Speaker Change: Of the products and then again, depending on how well those therapies take off like most things there'll be lots of room for multiple products to continue to grow to do well I would point, though back to this broader point about the CMS changes that just took place again.

Anthony: I think we're going to see a lot of different diagnostics pop up in many of these differences.

Speaker Change: <unk>.

Speaker Change: How well they'll be accepted and integrated into into practice I think remains to be seen I think as it relates to Alzheimer's specifically I think all the baseline tests were done off of pet pre and post <unk>.

Speaker Change: If you were doing scans.

Speaker Change: Your radio App.

Jay Saccaro: So really, really nice market there. The market continues to be robust. We're seeing PDX putting very solid numbers up in line with procedure growth. And, as you know, we do a quarterly survey. And then we also do work looking at all of the surveys out there, in particular with respect to the US. And many of our customers are telling us in those surveys they plan to spend more on capital investments in the second half. So I think that's a really good backdrop as we look to deliver on the guidance that we've just shared. We're seeing growth in the equipment market in the US.

Speaker Change: Your pharmaceutical product again in this case the radiopharmaceutical diagnostic you only receive may be a few hundred dollars for reimbursement on it and now you will receive.

Speaker Change: Being able to actually see where the amyloid beta is actually see the elimination of it on scans. We believe is going to still be a hallmark of <unk>.

Speaker Change: Something closer to the actual list price, which could be thousands of dollars all of a sudden the economics for a health care provider to move to that space makes a lot of sense and if you have a larger distribution network multiple molecules that you're bringing to that customer you can contract at a larger scale and thats really.

Speaker Change: The products and then again, depending on how well those therapies take off like most things there'll be lots of room for multiple products to continue to grow to do well I would point, though back to this broader point about the CMS changes that just took place again.

Speaker Change: What we're super excited about obviously alzheimers being one part of that but breast cancer.

Speaker Change: You were doing scans.

Speaker Change: <unk> radio.

Peter Arduini: And we also feel very good about the share position that we've had. We launched a number of new products in ultrasound. And so we're seeing real receptivity to some of the new products that we have in place. So overall, we feel quite good about the US market. We feel good about the orders backdrop. And then the other point I would note is backlog is up sequentially $300 million in that range at $19 billion. So we're keeping the backlog at the level that we'd like to, as we continue to grow the business.

Speaker Change: Your pharmaceutical product again in this case the radiopharmaceutical diagnostic you only receive maybe a few hundred dollars for reimbursement on it and now you will receive something closer to the actual list price which could be.

Speaker Change: Parkinson's disease cardiovascular disease down the road all of those we look at and say with some of these changes that have taken place we're optimistic about what growth that can bring.

Speaker Change: Thank you.

Speaker Change: <unk> of dollars all of a sudden the economics for a health care provider to move to that space makes a lot of sense and if you have a larger distribution network of multiple molecules that you're bringing to that customer you can contract at a larger scale and that's really what we're super excited about obviously alzheimers being one.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Vijay Kumar with Evercore ISI.

Speaker Change: Yes.

Vijay Kumar: Hi, guys. Good morning, and thank you for taking my question.

Speaker Change #155: Okay. My first question was on guidance with revenues cut by 250 basis points operating margins tweak up 10 basis points.

Peter Arduini: What would you add to that? Yeah, I think you covered it, Jay, but we just, I think, a train in the US team just had a phenomenal quarter. And it is about products, but it is about, we've talked about team itself, the talent upgrades that we put in place, the new sales disciplines and processes, and really are enterprise value opposition that we bring to a big IDN. We had quite a few larger wins. And again, I'd even cite some new product areas, like in the Vascular Lab area, where we're winning growth in the IGT business and taking share that we haven't realistically in previous years.

Speaker Change: Of that but breast cancer.

Speaker Change #108: And it doesn't really explain the EPS rate any below the line assumptions change tax.

Speaker Change: Parkinson's disease cardiovascular disease down the road all of those we look at and say with some of these changes that have taken place. We are optimistic about what that can bring.

Speaker Change: <unk> expense other other income.

Speaker Change: No I think broadly speaking.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: The below the line assumptions are unchanged and so as we look at it we have a revenue reduction it's supported by what we have put forth I think.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of <unk> Kumar with Evercore ISI.

Vijay Muniyappa Kumar: Hi, guys. Good morning, and thank you for taking my question.

Speaker Change: It is a fairly and continues to be a fairly wide EPS range and a lot of that reflects the uncertainty that we see in China. So no major changes below the line.

Speaker Change: My first question was on guidance with revenues cut by 250 basis points operating margins tweak up 10 basis points.

Peter Arduini: But, you know, it's an older install base in the United States. So we think we actually have a pretty good replacement cycle that's going to continue on. Signals from our customers, particularly CFOs, that we survey in such are positive about the investments. And, you know, the way this works out is when you see big growth in a lot of the med tech, flowable businesses, catheters in such or in the pharmaceutical side, ultimately that puts more pressure to buy more equipment, because you're putting more patients through the system. So we see that in delay coming through, but are quite quite confident about how we see the US market and your question on the radio pharmaceutical side.

Speaker Change: It doesn't really explain the EPS rate any below the line assumptions changed tax.

Speaker Change: But and feel good about in particular, given the strong performance in the first half along with the continued line of sight to some of these additional productivity initiatives, we feel good about delivering on this range.

Speaker Change: Expense other other income.

Speaker Change: No I mean broadly speaking.

Speaker Change: The.

Pete: Understood and Pete one for you I know you've spoken about new product momentum.

Speaker Change: Below the line assumptions are unchanged and so as we look at it we have a revenue reduction it's supported by what we put forth I think.

Pete: NPI.

Pete: Talk about some of these new products that youre launching about to launch I think you've had a bunch of software side as well and maybe lift them out.

Speaker Change: It's.

Speaker Change: It is a fairly and continues to be a fairly wide EPS range.

Speaker Change: A lot of that reflects the uncertainty that we see in China. So no major changes below the line.

Pete: This incremental share as we look at back half into the medium term.

Peter Arduini: You know, look, I think we're going to see a lot of different diagnostics pop up in many of these different phases. How well they'll be accepted and integrated into practice, I think, remains to be seen. I think it relates to Alzheimer's specifically. I think, you know, all the baseline tests were done off of PET, the pre and the post, you know, being able to actually see where the amyloid beta is, actually see the elimination of it on scans. We believe is going to still be a whole mark of the products. And then again, depending on how well those therapies take off, like most things, there'll be lots of room for multiple products to continue to grow to do well.

Speaker Change: And feel good about in particular, given the strong performance in the first half along with the continued line of sight to some of these additional productivity initiatives, we feel good about delivering on this range.

Speaker Change: Yes look I think we've got across the business, we've had some multiple updates and upgrades across the product family line.

Speaker Change: Coming to value <unk> products that we've just introduced come out with a significant amount of upgrade products I think one of the things that's driving a lot of.

Speaker Change: Understood.

Speaker Change: One for you I know you've spoken about new product momentum.

Speaker Change: NPI.

Speaker Change: Growth, particularly in MLR is our upgrades to our deep learning module in that in that case.

Speaker Change: Talk about some of these new products that youre launching about to launch I think you've had a bunch of software side as well.

Speaker Change: <unk> capability and installed base upgrades in the ultrasound space, particularly in general imaging, we introduced quarter back quite a few new versions updated that product line.

Speaker Change: Maybe lift them out.

Speaker Change: Incremental share as we look at back half into the medium term.

Peter Arduini: I would point to back to this broader point about the CMS changes that just took place. Again, if you were doing scans and your radio act, your pharmaceutical product, again in this case, the rate of pharmaceutical diagnostic, you only received maybe a few hundred dollars for reimbursement on it. And now you receive, you know, something closer to the actual list price, which could be, you know, thousands of dollars. All of a sudden, the economics or healthcare provider to move to that space makes a lot of sense. And if you have a larger distribution network of multiple molecules that you're bringing to that customer, you can contract that at a larger scale.

Speaker Change: Yes look I think we've got across the business, we've had some multiple updates and upgrades across the product family line.

Pete: That has done quite well this is the logic clients. So theres almost four different derivatives, there plus and our volumes saw in women's Health Carolina, and we're seeing those pacing on track if not better you might have seen our revenue in ultrasound.

Speaker Change: Coming to value MLR products that we've just introduced come out with a significant amount of upgrade products I think one of the things that's driving a lot of.

Pete: Was was little light in this particular quarter, but as we go into the second half we expect that's going to pick up effect. Our orders was positive we had good orders.

Speaker Change: Growth, particularly in EMR is our upgrades to our deep learning module in that in that case.

Pete: Pick up here. So that's a positive sign as we look forward I mentioned vascular and IGT, we're doing quite well with our surgical CRM OFC business Theres, a bunch of new software applications.

Pete: In room capabilities that bring almost cath lab capabilities into a mobile CRM are Ali a platform, we're doing quite well with which is which is growing share and I would say on the pdx side.

Speaker Change: That has done quite well this is the logic clients. So theres almost four different derivatives there plus in our volumes saw in women's Health Carolina, and we're seeing those pacing on track if not better might've seen our revenue in ultrasound.

Peter Arduini: And that's really what we're super excited about. Obviously, Alzheimer's being one part of that, but breast cancer, Parkinson's disease, cardiovascular disease down the road, all of those we look at and say, with some of these changes that have taken place, we're optimistic about what growth that can bring.

Pete: Particularly on our monitoring systems that are in room, the new monitors themselves. We're seeing some nice pick up so that's the that's the broader mix and then what.

Speaker Change: Was was little light in this particular quarter, but as we go into the second half we expect that's going to pick up effect. Our orders was positive we had good orders.

Vijay Kumar: Thank you. Our next question comes from the line of Vijay Kumar with Evercore ISI. Hi guys, good morning, and thank you for taking my question.

Speaker Change: Pick up here. So that's a positive sign as we look forward I mentioned vascular and IGT, we're doing quite well with our surgical CRM OFC business Theres, a bunch of new software applications.

Pete: What I was mentioning at Investor Day, we'll talk about what we're going to see in the 25 through 27 range.

Pete: We're thinking about where we are with photon counting next generation MRI.

Speaker Change: In room capabilities that bring almost cath lab capabilities into a mobile CRM.

Jay Saccaro: Okay, my first question was on guidance of revenues cut by 250 basis points. I think operating margins tweaked up 10 basis points. You know, it doesn't really explain the EPS right any below the line assumptions change tax, you know, expense other other income. No, I mean, broadly speaking, the below the line assumptions are unchanged. And so, as we look at it, you know, we have a revenue reduction. It's supported by what we've put forth. I think, you know, it is a fairly it continues to be a fairly wide EPS range. And a lot of that reflects the uncertainty.

Speaker Change: Broader capabilities within pet imaging just to give an example, so those are some of the bigger investments obviously, we've been making for the past few years and they are well on track and again will be a highlight of our investor day in November.

Speaker Change: Ali a platform.

Speaker Change: We're doing quite well with which is which is growing share and I'd say on the PDL side.

Speaker Change: Particularly on our monitoring systems that are in room, the new monitors themselves. We're seeing some nice pickup. So that's the that's the broader mix and then.

Speaker Change #121: That's helpful. Thank you guys.

Vijay: Thanks Vijay.

Vijay: Thank you.

Speaker Change #151: Our next question comes from the line of David Roman with Goldman Sachs. Please proceed.

Speaker Change: What I was mentioning at Investor Day, we'll talk about what we're going to see in the 25 through 27 range.

David Roman: Thank you and good morning, everybody I wanted to dig into China, a little bit further.

Speaker Change: We're thinking about where we are with photon counting next generation MRI.

David Roman: Understanding that the stimulus is a bit of.

David Roman: No maybe we could just take a step back and you could talk a little bit about just the underlying drivers in China, because if you look at some of the third party data it looks like the vast majority of the installed base across ultrasound Cte in EMR has been refreshed in the past four years. So how should we think about the medium term underlying growth in China and is it more than just.

Jay Saccaro: That we see in China.

Jay Saccaro: So no major changes below the line, but I feel good about, you know, in particular given the strong performance in the first half, along with the continued line of sight, some of these additional productivity initiatives, we feel good about delivering on this range.

Speaker Change: That's helpful thinking guys.

Vijay: Thanks Vijay.

Vijay: Yeah.

Speaker Change: Impacting the.

Speaker Change: Our next question comes from the line of David Grossman with Goldman Sachs. Please proceed.

Speaker Change: The outlook here.

Peter Arduini: Understood, and Pete, one for you. I know you've spoken about new product momentum, NPI. Talk about some of these new products that you're launching, or about to launch. I think you've had a bunch on software side as well. Maybe lift them out and, you know, what is incremental share as we look at back after the meeting term. Yeah, I think you look. I think we've got across the business, we've had some multiple updates and upgrades across the product family line. Coming to value MR products that we've just introduced, come out with significant amount of upgrade product.

David: Yes, David Good question as we look at China, Historically, we've seen this as a very robust growth market.

David Grossman: Thank you and good morning, everybody I wanted to dig into China, a little bit further.

David Grossman: Understanding that the stimulus is a bit of.

Speaker Change #115: Previously at our Investor Day, we talked about China growth of 6% to 8%.

David Grossman: No maybe we could just take a step back and you could talk a little bit about just underlying drivers in China, because as you look at some of the third party data it looks like the vast majority of the installed base across ultrasound Cte in EMR has been refreshed in the past four years. So how should we think about the medium term underlying growth in China and is it more than <unk>.

Speaker Change #115: And we feel good long term about the growth dynamics in China, We had a very solid year last year with double digit growth and then we see a decline this year, but our decline this year is not related to.

David: Each of installed base as we see it our decline this year is very much related to <unk>.

Speaker Change: Just stimulus impacting the.

Speaker Change: The outlook here.

David: Limited buying activity by hospitals as they await clarity on the stimulus.

David Grossman: Yes, David Good question as we look at China, Historically, we've seen this as a very robust growth market.

Peter Arduini: I think one of the things that's driving a lot of growth, particularly in MR, is our upgrades to our deep learning module. And that in that case, Sarah recon DL capability and install base upgrades in the ultrasound space, particularly in general imaging. We introduced a quarterback quite a few new versions updated that product line that has done quite well. This is the logic line, so there's almost four different derivatives there, plus in our volumes on women's health care line, and we're seeing those pacing on track. It's not better. You might have seen our revenue and ultrasound was was was was a little light in this particular quarter, but as we go into the second half, we expect that's going to pick up.

Speaker Change: As it pertains to your specific comment on age of installed base and the one thing I would note about your comment is that a lot of the recent purchases in the timeframe that you referenced in the refreshed equipment were at lower and we're counting hospitals.

Speaker Change: Previously at our Investor Day, we talked about China growth of 6% to 8%.

Speaker Change: And we feel good long term about the growth dynamics in China, We had a very solid year last year with double digit growth and then we see a decline this year, but our decline this year is not related to.

Speaker Change: <unk> major institutions, where we have a higher presence and so as we look at the age of our installed base in areas like ultrasound and imaging. It is above the numbers that you've described.

Speaker Change: Each of installed base as we see it our decline this year is very much related to <unk>.

Speaker Change: Limited buying activity by hospitals as they await clarity on the stimulus.

Speaker Change #101: And is it kind of consistent broadly speaking with global averages. So I do think there is a dynamic of the tier of hospital in play.

Speaker Change: But overall, we think this will continue to be a really nice market for us long term I don't know if you'd add anything I think you covered it but just a couple of facts.

Peter Arduini: In fact, our orders was positive. We had good orders pick up here. So that's a positive sign as we look forward. I mentioned vascular and I GT. We're doing quite well with our surgical CRM OEC business. There's a bunch of news software applications in room capabilities that bring almost cat lab-like capabilities into a mobile CRM. Our OLEA platform we're doing quite well with, which is growing share. And I'd say on the PDX side, particularly on our monitoring systems that are in room, the new monitors themselves, where we're seeing some nice pick up. So that's the that's the broader mix.

Speaker Change: The refreshed equipment were at lower and we're counting hospitals.

Speaker Change: As you know David I mean.

David: China population of $1 four.

Speaker Change: Versus major institutions, where we have a higher presence and so as we look at the age of our installed base in areas like ultrasound and imaging. It is above the numbers that you've described.

Speaker Change #105: <unk> $400 million have I'd say pretty good access there is a 1 billion people that don't so we have a partnership with Sino farm with other broader distributor capabilities to be able to reach into that untapped market and so that will continue to be a growth area. It's probably also going to be part of some of the investments that the government is making.

Speaker Change: And as you kind of consistent broadly speaking with global averages. So I do think there is a dynamic of the tier of hospital in play.

Speaker Change #112: The other tidbit is is that used equipment is it actually allowed to be sold within China, and so there really isn't a recycling of used equipment around it ends up being all new equipment coming in and so that actually haven't has.

Speaker Change: But overall, we think this will continue to be a really nice market for us long term because I don't know if you'd add anything I think you covered it but just a couple of facts.

Peter Arduini: And then, you know, what I was mentioning at Investor Day, we'll talk about what we're going to see in the 25 through 27. and Range. Now, how we're thinking about where we are with photon counting, next generation, MRI, broader capabilities within PET CT imaging, just to give an example.

Speaker Change: As you know David I mean.

David Grossman: The China population $1 four.

Speaker Change: A higher effect on growth in other markets, where particularly in the United States, where we have quite a bit of upgrades and movement around equipment that doesn't exist in in China. So when we look at the numbers I think we feel pretty good about what the longer term growth potential is just based on those facts.

Speaker Change: <unk> $400 million have you say pretty good access there's a 1 billion people that don't so we have a partnership with Sino farm with other broader distributor capabilities to be able to reach into that untapped market and so that will continue to be a growth area. It's probably also going to be part of some of the investments that the government is making.

Peter Arduini: So, those are some of the bigger investments, obviously, we've been making for the past few years, and they're well on track. And again, we'll be a highlight of our investor day in November. That's helpful.

Speaker Change: That's super helpful and maybe just a follow up on some of your comments about the U S.

Unknown Attendee: Thank you, guys. Thank you.

Speaker Change: The other tidbit is that used equipment isn't actually allowed to be sold within China, and so there really isn't a recycling of used equipment around it ends up being all new equipment coming in and so that actually haven't has a.

Speaker Change: <unk> now heard a couple of companies talk about operating rooms, and other parts of the hospital facing capacity constraints you called out EP as an area of growth focus for you how should we think about kind of your tethering into some of these higher growth attractive end markets, where that structural heart or do we see that in your interventional.

David Roman: Our next question comes from the line of David Roman with Goldman Sachs. Please proceed. Thank you and good morning, everybody. I wanted to dig into China a little bit further. Understanding that the stimulus is a bit of an unknown. Maybe we could just take a step back and you could talk a little bit about just underlying drivers in China, because if you look at some of the third-party data, it looks like the vast majority installed based across ultrasound, CT, and MR has been refreshed in the past four years. So, how should we think about the medium-term underlying growth in China, and is it more than just stimulus impacting the outlook here?

Speaker Change: A higher effect on growth and in other markets, where particularly in the United States, where we have quite a bit of upgrades and movement around equipment that doesn't exist.

Speaker Change: Imaging segments. So how should we think about the contribution to GE and then does that change any of your sort of strategic thoughts here from a business development standpoint on areas.

Speaker Change: In China. So when we look at the numbers I think we feel pretty good about what the longer term growth potential is just based on those facts.

Speaker Change: That's super helpful. And then maybe just a follow up on some of your comments about the U S as well.

Speaker Change: Interest being you sit around the periphery of a lot of these procedures kind of going.

Speaker Change: Or into the implantable device or sort of a quote unquote inside the body side of things.

Speaker Change: <unk> now heard a couple of companies talk about operating rooms, and other parts of the hospital facing capacity constraints you called out EP as an area of growth focus for you how should we think about kind of your tethering to some of these higher growth attractive end markets, where that structural heart or <unk> do we see that in your interventional.

Speaker Change: Yes, David is a really good question and obviously, we'll spend more time in some strategic settings on this but look at a high level. We have the strategy. We focus on we articulated is D. Three which again is smart integrated connected devices that work together around a given disease state our care.

Jay Saccaro: Yeah, David, good question. As we look at China historically, we've seen this as a very robust growth market previously at our Investor Day. We talked about China growth of six to eight percent, and we feel good long-term about the growth dynamics in China. We had a very solid year last year with double-digit growth, and then we see a decline this year. But our decline this year is not related to the age of the installed base as we see it. Our decline this year is very much related to limited buying activity by hospitals, as they await clarity on the stimulus.

Speaker Change: Imaging segments. So how should we think about the contribution to GE and then does that change any of your sort of strategic thoughts here from a business development standpoint.

Speaker Change: Pathway and enable to drive more productivity or better outcomes with digital AI features and so if you take that EP example, you had the first part is having world class Electrophysiology labs that we can win the hardware and the reality of it is a few years ago, we probably didn't have all the right features we do now.

Speaker Change: Areas of interest being you sit around the periphery of a lot of these procedures kind of going.

Speaker Change: Or into the implantable device or sort of a quote unquote inside the body side of things.

Speaker Change: Yes, David it's a really good question and obviously, we'll spend more time in some strategic settings on this but look at a high level. We have the strategy. We focus on we articulated is D. Three which again is smart integrated connected devices that work together around a given disease state or cure.

Speaker Change: So we think from a standpoint of winning those labs, we're going to win at a higher rate that we did in the past on the disease state side of electrophysiology itself, we actually have folks that are <unk>.

Jay Saccaro: As it pertains to your specific comment on age of installed base, the one thing I would note about your comment is that a lot of the recent purchases in the timeframe that you referenced and the refreshed equipment were at lower end or counting hospitals versus major institutions where we have a higher presence. And so, as we look at the age of our installed base in areas like ultrasound and imaging, it is above the numbers that you've described and is kind of consistent broadly speaking with global averages. So, I do think there's a dynamic of the tier of hospital in play, but overall, you know, we think this will continue to be a really nice market for us long-term.

Speaker Change: I'm really focused on that to say how does ultrasound how does the EP devices. How does the actual data systems work together. So we can come up with a better solution and we are working on Thats. One of the main reasons that we created the IGT ultrasound alignment because theres a lot more cardiovascular benefits and everything from.

Speaker Change #103: Channel to the development side and to your broader point when you start thinking about disease states. It opens or lends up to say where should I partner with this company more because if we do we could solve this customer problem or should I buy this asset because together these four things create more value and to answer your question.

Speaker Change: Primarily focused on that to say how it is ultrasound how does the EP devices. How does the actual data systems work together. So we can come up with a better solution and we are working on Thats. One of the main reasons that we created the IGT ultrasound alignment because theres a lot more cardiovascular benefits.

Peter Arduini: I don't know if you'd add anything. I think you covered it, Jay, but just a couple of facts. As you know, David, I mean the China population, billion four, about 400 million have, you say, pretty good access. There's a billion people that don't. So, you know, we have a partnership with Sinopharm with other broader distributor capabilities to be able to reach into that untap market. And so, that will continue to be a growth area. It's probably also going to be part of some of the investments that the government is making. The other tip that is is that you know, use equipment isn't actually allowed to be sold within China.

Speaker Change: Were expanding our horizons to think about what should be part of GE healthcare.

Speaker Change: Terrific. Thanks, so much and look forward to seeing you in November.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Matt Taylor with Jefferies.

Speaker Change: And everything from channel to the development side and to your broader point when you start thinking about disease stage. It opens your lens up to say where should I partner with this company more because if we do we could solve this customer problem or should I buy this asset because together these four things create more value and your answer.

Matt Taylor: Hi, Thank you for taking the question.

Matt Taylor: I guess I had one question on the Pdx business, you talked a little bit about the Medicare changes, obviously, a big positive for that space I guess I was wondering if that changes your thoughts on the long term opportunity or the growth rate for the contrast media or molecular imaging markets that youre in.

Peter Arduini: And so, there really isn't a recycling of used equipment around; it ends up being all new equipment coming in. And so, that actually even has a higher effect on growth than in other markets where, you know, particularly in the United States where we have quite a bit of upgrades and movement around equipment. That doesn't exist in China. So, when we look at the numbers, I think we feel pretty good about what the longer-term growth potential is just based on this fact.

Speaker Change: Question, absolutely were expanding our horizons to think about what should be part of GE healthcare.

Speaker Change: And I was hoping you've called out visit mill a couple of times.

Speaker Change: Terrific. Thanks, so much and look forward to seeing you in November.

Speaker Change: For the last few calls with the great growth Youre seeing there if you could outline the opportunity for that or for a period as just to give us a better sense of what.

Speaker Change: You.

Speaker Change: Thank you.

Speaker Change: Next question comes from the line of Matt Taylor with Jefferies.

Speaker Change: What they're contributing today or how you feel about them contributing to growth, especially next year as you launch for <unk>.

Matthew Charles Taylor: Hi, Thank you for taking the question.

Matthew Charles Taylor: I guess I had one question on the Pdx business, you talked a little bit about the Medicare changes, obviously, a big positive.

Unknown Attendee: That's super helpful.

David Roman: And maybe just a follow-up on some of your comments about the U.S., we've now heard a couple of companies talk about operating rooms and other parts of the hospital facing capacity constraints. You called out EP as an area of growth focus for you. How should we think about kind of your tethering to some of these higher growth attractive end markets where that's structurally harder EP. Do we see that in your interventional imaging segment? So how should we think about the contribution to GE and then does that change any of your sort of strategic thoughts here from a business development standpoint on areas of interest being you sit around the periphery of a lot of these procedures, kind of going more into the implantable device or sort of quote unquote inside the body side of things.

Speaker Change: Sure maybe I'll start with a few comments and then turn it over to Pete as well.

Matthew Charles Taylor: For that space I guess I was wondering if that changes your thoughts on the long term opportunity or the growth rate for the contrast media or molecular imaging markets that youre in.

Speaker Change: Overall, the pdx business has been growing really well we.

Pete: We saw 14% in the second quarter, a lot of that relates to volume about 10% of that relates to volume with a couple of points of price and new products also contributing and you heard us talk about some of the new specialty products in the call. When we talked about visit Mel volumes tripling in the U S.

Speaker Change: I was hoping you called out does the mill a couple of times.

Speaker Change: The last few calls with the great growth Youre seeing there if you could outline the opportunity for for that or for a period as just to give us a better sense of what.

Speaker Change: But they are contributing today or how you feel about them contributing to growth, especially next year as you launch period at.

Speaker Change: Yes.

Speaker Change: And based on the new CMS, along with the new approval, we're really optimistic about this particular product long term and if I think about areas that are changing relative to the prior investor day in prior investor Investor Our long term expectations. This whole area is one that we have a little bit more opt.

Speaker Change: Sure maybe I'll start with a few comments and then turn it over to Pete as well.

Pete: Overall, the pdx business has been growing really well we.

Peter Arduini: Yeah, David's a really good question, and obviously we'll spend more time in some strategic settings on this. But look at a high level, we have the strategy we focus on, we articulate as D3, which again is smart integrated connected devices that work together around a given disease state or care pathway and enable to drive more productivity or better outcomes with digital AI features. And so if you take that EP example, you had the first part is having world-class electrophysiology labs that we can win the hardware, and the reality of it is a few years ago we probably didn't have all the right features we do now.

Pete: We saw 14% in the second quarter, a lot of that relates to volume about 10% of that relates to volume with a couple of points of price and new products also contributing.

Speaker Change: <unk>.

Speaker Change #124: <unk> sales at this point are still very small so we're still talking a few million dollars, but as we see the uptake of the Alzheimer's therapies, we're seeing continued interest and implementation of programs to support diagnostics in this area. So we expect to see continued growth throughout the year I think the CME.

Pete: You heard us talk about some of the new specialty products in the call when we talked about visit Mel volumes tripling in the U S.

Pete: And based on the new CMS, along with the new approval, we're really optimistic about this particular product long term and if I think about areas that are changing relative to the prior investor day in prior investor Investor Our long term expectations. This whole area is one that we have a little bit more opt.

Pete: This ruling could unlock accelerated growth next year, both in visit Mel flip here at <unk> and some of the other products that we're working on Pete I don't know if you'd like to add to that yes, I just think we havent framed up what all the longer term growth yet will be on the molecules.

Peter Arduini: So we think from a standpoint of winning those labs we're going to win at a higher rate than we did in the past on the disease state side of electrophysiology itself. We actually have folks that are primarily focused on that to say how does ultrasound. How does the EP devices how does the actual data systems work together so we can come up with a better solution. And we are working on that's one of the main reasons that we created the IGT ultrasound alignment because there's a lot more cardiovascular benefits and everything from channel to the development side.

Pete: Vimizim on.

Pete: But needless to say, we're more optimistic today than we were prior to the approval and again, what we're working through right now and frame. This up is just take an example, again of a product that.

Speaker Change #156: The hospital might be paying a couple of thousand dollars four but theyre getting reimbursed $200 for now and in the future. They will get reimbursed at what they're paying for it and so to be able to detail that and have a discussion with an institution about how to build out a program thats actually going to be a value creator for them and our.

Pete: Ruling could unlock accelerated growth next year, both in visit Mel flip here at edge and some of the other products that we're working on Pete I don't know if you'd like to add to that.

Peter Arduini: And to your broader point, you know when you start thinking about disease states, it opens your lens up to say, well, should I partner with this company more because if we do, we could solve this customer problem, or should I buy this asset because together these four things create more value. And the answer question now we absolutely we're expanding our horizons to think about what should be part of GG health care.

Pete: I just think we haven't framed up.

Pete: What all the longer term growth yet will be on the molecules.

Speaker Change #152: Confidence that the outcome capabilities for the patient is higher is very strong. So you think about syriana for metastatic breast cancer, it's actually on <unk>.

Speaker Change #135: Many of the guidance documents now, but its challenging economical for someone to actually implemented on a day to day process tomorrow situations that changes.

Unknown Attendee: Terrific, thanks so much, and look forward to seeing you in November.

Pete: The hospital might be paying a couple of thousand dollars four but theyre getting reimbursed $200 for now and in the future they'll get reimbursed at what they're paying for it and so to be able to detail that and have a discussion with an institution about how to build out a program, that's actually going to be a value creator for them and our.

Matt Taylor: Thank you. Our next question comes from the line of Matt Taylor with Jeffries. Hi, thank you for taking the question. I guess I had one question on PDX business. You talked a little bit about the Medicare changes; obviously, a big positive for that space. I guess I was wondering if that changes your thoughts on the long-term opportunity or the growth rate for the contrast media or molecular imaging markets that you're in.

Speaker Change #133: And the other aspect is probably even less about what we do on diagnostics and more about what the pharmaceutical companies are doing with therapies and so the more therapies that come out in this space. The more you need someone like GE healthcare that has the equipment the data integration of distribution capabilities and the diagnostic molecules.

Pete: Confidence that the outcome capabilities for the patient is higher is very strong. So if you think about syriana for metastatic breast cancer.

Pete: To help solve the equation and so we will obviously spend more time on this with investors, but this is a very positive direction. It's quite helpful for our growth strategies in the coming years.

Pete: <unk> on <unk>.

Speaker Change: Many of the guidance documents now, but its challenging economical for someone to actually implemented on a day to day process tomorrow situation that changes.

Jay Saccaro: And I was hoping you've called a bismill a couple of times the last you calls with the great growth you're seeing there. If you could outline the opportunity for that or for a period, as just to give us a better sense of what they're contributing today or how you feel about them contributing to growth, especially next year as you launch for period. Sure, maybe I'll start with a few comments and then turn it over to Pete as well. Overall, the PDX business has been growing really well. We saw 14% in the second quarter. A lot of that relates to volume; about 10% of that relates to volume, with a couple points of price and new products also contributing.

Speaker Change: Thanks, guys can I just ask one follow up too on China, I'm, just trying to square your comments with some of the competitors the peers in your approach to guidance. There I guess do you think that you are.

Speaker Change: And the other aspect is probably even less about what we do on diagnostics and more about what the pharmaceutical companies are doing with therapies and so the more therapies that come out in this space. The more you need someone like GE healthcare that has the equipment the data integration and distribution capabilities and the diagnostic molecules.

Speaker Change: Seeing the same things that your competitors are talking about they're talking about orders starting to come back through the second half of the year and I'm just curious if youre being more purposeful about being conservative with your China guidance.

Speaker Change: To help kind of solve the equation and so we will obviously spend more time on this with investors, but this is a very positive direction. It's quite helpful for our growth strategies in the coming years.

Speaker Change: Just given the uncertainty there or do you think that you are aligned with how others are calling it.

Speaker Change: Sure.

Speaker Change: Sure. So just just to start and I'll turn it over to Pete <unk>.

Pete: First half decline in sales 15%.

Jay Saccaro: And you heard us talk about some of the new specialty products in the call. We talked about VisML volumes tripling in the U.S. And based on the new CMS, along with the new approval, we're really optimistic about this particular product long term. And if I think about areas that are changing relative to the prior investor day and prior investor, our long-term expectations, this whole area is one that we have a little bit more optimism on. VisML sales at this point are still very small. So we're still talking a few million dollars. But, as we see the uptake of the Alzheimer's therapies, we're seeing continued interest and implementation of programs to support diagnostics in this area.

Pete: As we look at the market.

Pete: Orders in the market and we're talking about market and tender activity versus anything share related.

Pete: We think the prudent number is in this adjust down the number $500 million at the midpoint, leading to a high high teens decline in the second half of the year now again, we've taken out the benefit of impact from stimulus on sales and I would also say that through at least the third quarter.

Speaker Change: Just given the uncertainty there or do you think that you are aligned with how others are calling it.

Speaker Change: Sure.

Speaker Change: Sure So just to start and I'll turn it over to Pete <unk>.

Pete: We have a very locked up dynamic on orders.

Pete: First half decline in sales 15%.

Pete: Into the fourth now could we be wrong to the upside we might be but as we look at it today. We felt it was prudent not to try to time the impact on the fourth quarter in terms of sales and we remove that I'm hopeful that we do better but at this point. We think this was the right thing to do we will watch the stimulus really care.

Pete: As we look at the market.

Pete: Orders in the market and we're talking about market and tender activity versus anything share related.

Jay Saccaro: So we expect to see continued growth throughout the year. I think the CMS ruling could unlock accelerated growth next year, both in VisML, Flipyrida, and some of the other products that we're working on.

Pete: We think a prudent number is in this adjust down the number $500 million at the midpoint, leading to a high high teens decline in the second half of the year now again, we've taken out the benefit of impact from stimulus on sales and I would also say that through at least the third quarter.

Pete: Fully as we as we think about what the impact on 2025 will be.

Peter Arduini: Pete, I don't know if you'd like to add to that. Yeah, I just think we haven't framed up what all the longer term growth yet will be on the molecules. But needless to say, we're more optimistic today than we were prior to the approval. And again, what we're working through right now and frame this up is just take an example. Again, of a product that the hospital might be paying a couple thousand dollars for, but they're getting reimbursed 200 dollars for. Now, in the future, they'll get reimbursed at what they're paying for it. And so to be able to detail that and have a discussion with an institution about how to build out a program that's actually going to be a value creator for them.

Pete: But we have continued declines in a tough market forecasted and again, it's not in GE specific item. This is a broad based market view that we have.

Pete: We have a very locked up dynamic on orders and into the fourth now could we be wrong to the upside we might be but as we look at it today. We felt it was prudent not to try to time the impact on the fourth quarter in terms of sales and we remove that I am hopeful that we do better but at this.

Pete: Okay.

Pete: Look I think I think Jay hit the point so.

Speaker Change #127: Again when this comes back for US. This is really largely related to timing of China's stimulus program. So we're not betting on the timing. We think we've got our base case lined out well, which is really tied to our installed base. What's our secured business that we have here coming through the second half and as I mentioned, we would expect to see.

Pete: Point, we think this was the right thing to do we will watch the stimulus really carefully as we as we think about what the impact on 2025 will be.

Speaker Change: Some orders uptick later this year, but when we take a look at particularly the equipment. We have between the time you win a tender get an order have the room ready and install it that order to sales piece would be very tight and hence why we just decided to take it out.

Pete: We have continued declines in a tough market forecasted and again, it's not a GE specific item. This is a broad based market view that we have.

Peter Arduini: And our confidence that the outcome capabilities for the patient is higher is very strong. So you think about Seriana for metastatic breast cancer. It's actually on many of the guidance documents now, but it's challenging economical for someone to actually implement it on a day-to-day process. On tomorrow's situation, that changes. And the other aspect is probably less about what we do on diagnostics and more about what pharmaceutical companies are doing with therapies. And so the more therapies that come out in this space, the more, you know, you need someone like a GEL care that has the equipment, the data integration, the distribution capabilities, and the diagnostic molecules to help kind of solve the equation.

Pete: Okay.

Pete: I think Jay hit the point so.

Speaker Change: Again when this comes back for US. This is really largely related to timing of China's stimulus program. So we're not betting on the timing. We think we've got our base case lined out well, which is really tied to our installed base. What's our secured business that we have here coming through the second half and as I mentioned, we would expect to see.

Pete: Thanks Pete.

Pete: <unk>.

Speaker Change #104: Thank you.

Speaker Change: Our next question comes from the line of Graham Doyle with UBS.

Graham Doyle: Good morning, good morning, guys.

Graham Doyle: Good morning, guys. Thanks for taking the question I get a follow up on China.

Speaker Change: When you kind of.

Pete: Some orders uptick later this year, but when we take a look at particularly the equipment. We have between time you win a tender get an order have the room ready and install it.

Speaker Change: Called out the actual number it looks to me like there's kind of a like a 40% gain.

Speaker Change: A nab in HTM versus your original assumptions, which is obviously a very very large change and it just makes me wonder what's the comp and Ben.

Speaker Change: <unk> ordered as sales piece would be very tight and hence why we just decided to take it out.

Unknown Attendee: And so we will obviously spend more time on this with investors, but this is a very positive direction. And it's quite helpful for growth strategies in the coming years. Thanks, guys.

Mike: Targets they starting from next year, given how volatile that market is and to the point Mike made.

Pete: Thanks Pete.

Pete: <unk>.

Pete: Thank you Alan.

Speaker Change #113: I've seen it then it looks today and it does sound like Theyre not forecasting a decline of anywhere near that magnitude in the second half in China revenues.

Pete: Next question comes from the line of Graham Doyle with UBS.

Suraj Kalia: Can I just ask one follow-up to on China? I'm just trying to square your comments with some of the competitors that peers and your approach to guidance there. I guess do you think that you're seeing the same things as your competitors are talking about? They're talking about order starting to come back through the second half of the year. And I'm just curious if you're being more purposeful about being conservative with your China guidance, just given the uncertainty there, or do you think that you're aligned with how others are called. Julian. Sure, so just to start, and I'll turn it over to Pete.

Graham Doyle: Good morning, good morning, guys.

Speaker Change: Is it generally just about more treatments or is there something happening in say.

Graham Doyle: Good morning, guys. Thanks for taking the question, it's again a follow up on China.

Pete: When.

Adam: The patient monitoring market that maybe others Oxy Adam.

Speaker Change: Hey, you called out the actual number it looks to me like this kind of like a 40%.

Speaker Change #107: Great to get that correct. Thank you, yes I.

Speaker Change: <unk> NAND and HDD versus your original assumption, which is obviously a very very large change.

Speaker Change: I can start and they look for our business in China is primarily an imaging ultrasound story.

Speaker Change: All of us have different mixes of products. So there is not obviously, a one to one match, but I will tell you. What we did so what we've done is we have our sales force going out to all 31 of the provinces all of our big customers and actually asking the questions when youre going to buy what youre going to buy what thats going to look up and.

Speaker Change: It just makes me wonder what's the company's been built.

Speaker Change: Your midterm targets they starting from next year given high volatile that market is.

Speaker Change: To the point, Mike made I mean, I've seen as it looks today and it does sound like Theyre not forecasting a decline of anywhere near that magnitude in second half in China.

Jay Saccaro: First half decline in sales 15%. As we look at the market and the orders in the market and we're talking about market and tender activity versus anything share related, you know, we think the prudent number is in this adjust down the number 500 million at the midpoint, leading to a high teen decline in the second half of the year. Now, again, we've taken out the benefit of impact from stimulus on sales, and I would also say that, you know, through at least the third quarter, we have a very locked up dynamic on orders and into the fourth.

Speaker Change: We kind of roll that all up for each 31 provenance and try to understand from what Theyre, saying, what the timing would look like and then based on that understand how long. It takes a tender how long it takes to get the order how much time, then to actually do an install based on the mix and when we do that rollout, we do think theres going to be orders coming.

Speaker Change: Is it generally just about more frequently or is there something happening in say.

Greg: The patient monitoring market that maybe give us oxy and be great to get that correct. Thank you Greg.

Speaker Change: Starting to look for our business in China is primarily an imaging ultrasound story all of us have different mixes of products. So there is not obviously, a one to one match, but I will tell you. What we did so what we've done is we have our sales force going out to all 31 of the provinces all of our big customers.

Speaker Change: But we just don't think that there's enough time on the clock from the sales standpoint, and to Jay's point, we might be wrong, but we're not in the business of trying to guess and we just thought it prudent to take it out.

Speaker Change: Asking the questions when youre going to buy what youre going to buy what that's going to look up.

Peter Arduini: Now, could we be wrong to the upside? We might be. But as we look at it today, we felt it was prudent not to try to time the impact on the fourth quarter in terms of sales, and we've removed that. I'm hopeful that we do better, but at this point, we think this was the right thing to do. We'll watch the stimulus really carefully as we think about what the impact on 2025 will be. But, you know, we have continued declines and a tough market forecasted. And again, it's not a GE-specific item. This is a broad based market view that we have.

Speaker Change: Okay.

Speaker Change #155: Next question why was it in that in the first place.

Speaker Change: Roll that all up for each 31 provenance and try to understand what they're saying what the timing would look like and then based on that understand how long. It takes a tender how long it takes to get the order how much time them to actually do an installed based on the mix and when we do that rollout, we do think theres going to be orders coming.

Speaker Change: At what point did you put in.

Jay: In the guidance at the start of this.

Jay: This year was if you will because.

Speaker Change: Yeah.

Speaker Change #148: It didn't seem like something that was back to start so I'm just trying to figure out how much more people who have gone.

Speaker Change: Yeah, Barrett look very fair question and keep in mind.

Speaker Change: We just don't think that there's enough time on the clock from a sales standpoint and to Jay's point, we might be wrong, but we're not in the business of trying to guess and we just thought it prudent to take it out.

Speaker Change: Two when the stimulus came within four to six months it ramped unbelievably quickly.

Speaker Change #142: So I think as we started the year it wasn't super clear, what if there was going to be stimulus or not I think you may recall.

Peter Arduini: I think Jay hit the point. So, again, when this comes back, you know, for us, this is really largely related to the timing of the China stimulus program. So we're not betting on timing. We think we've got our base case lined out well, which is really tied to our installed base. What's our secured business that we have here coming to the second half. And as I mentioned, you know, we would expect to see some orders uptick later this year, but when we take a look at particularly the equipment we have, between time you would attend or get an order, have the room ready and install it.

Speaker Change: Okay.

Speaker Change #102: Next question what was it in there in the first place.

Speaker Change: But as we got closer to Q2 of the question is if it follows the same ramp it's going to probably be within this year. What's new is the fact that when it is slower and someone's deciding to buy if you buy something now you may not get the 30%, 40% 50% value from the government.

Speaker Change #106: Like at what point did you put in.

Jay: The guidance at the start.

Speaker Change: Started this year with if you will because.

Speaker Change #112: It didn't seem like something that was back to start so I'm just trying to figure out how much more what have they done.

Speaker Change #104: Yes look very fair question and keep in mind too when the stimulus came within four to six months it ramps unbelievably quickly.

Speaker Change: To actually support your sale.

Speaker Change: So naturally you are going to wait to kind of make a decision to see what stimulus is that's really the difference here in the calculation that.

Speaker Change #104: And so I think as we started the year it wasn't super clear what if there was going to be stimulus or not I think you may recall.

Unknown Attendee: That order to sales piece would be very tight, and hence why we just decide to take it out. Thanks.

Speaker Change #151: I don't think anybody saw that would take that much longer I mean, the only thing to add is.

Speaker Change: But as we got closer to Q2 of the question is if it follows the same ramp it's going to probably be within this year.

Speaker Change: This is not even it like so we're seeing a depressed level of demand relative to normal as people await clarity. We think the stimulus is a good positive thing long term, but in the market as it as we saw it in Q2 as we see Q3 quarter to date.

Unknown Attendee: Thanks for you. Thank you.

Graham Doyle: Our next question comes from the line of Graham Doyle with UBS. Morning, Room. Good morning, guys. Thanks for taking the question. It's again a follow-up on China. So it's just when you tell you, you kind of call that the actual number. It looks to me like there's kind of like a 40% down in H2 versus your virtual assumption, which is obviously a very, very large change. And it just makes me sort of wonder what's the confidence that you do hit your midterm target to start it from next year, given how volatile that market is.

Speaker Change: This new is the fact that when it is slower and someone's deciding to buy if you buy something now you may not get the 30 40, 50% value.

Speaker Change #100: <unk> from the government to actually support your sale.

Speaker Change: As depressing activity in the market, thus far and so that's why we made the assumption that we did.

Speaker Change #100: So naturally you're going to wait to kind of make a decision to see what stimulus is that's really the difference here in the calculation that.

Speaker Change: Okay.

Speaker Change #159: Sounds like an air pocket. So the situation for this period, let's say, perhaps thanks, a lot guys.

Speaker Change #100: I don't think anybody saw that would take that much longer I mean, the only thing to add is.

Speaker Change: Thank you.

Patrick <unk>: Thank you so much. Our next question comes from the line of Patrick <unk> with Morgan Stanley. Please proceed.

Speaker Change #100: This is not even like so we're seeing a depressed level of demand relative to normal as people await clarity. We think the stimulus is a good positive thing long term, but in the market as it as we saw it in Q2 as we see Q3 quarter to date it is depressing activity in.

Peter Arduini: And to the point that made, I mean, I was with both Siemens and Philips today. And it does sound like they're not forecasting a decline or anywhere near that magnitude in the second half and China residents. So is it genuinely just a lot more proven, or is there something happening in say the patient monitoring market that maybe the other side see and be great to get that. Thank you. Yeah, Grandma. I mean, I can start. I mean, look for our business in China. It's primarily an imaging ultrasound story. You know, all of us have different mixes of products.

Patrick <unk>: Thank you so much for taking the questions.

Patrick: I apologize if I heard this wrong I thought you guys mentioned that Q3 was something like plus one organic and so.

Speaker Change #111: The implied Q4 step up qualitatively how much is a function of ultrasound launches relative to the strong U S imaging market.

Speaker Change #100: The market, thus far and so that's why we made the assumption that we did.

Speaker Change: Apologies if I missed this earlier, but if you could just unpack the <unk> that would be really helpful.

Speaker Change: Okay.

Speaker Change #103: It sounds like an air pocket. So the situation for this period and that's Super helpful. Thanks, a lot guys.

Speaker Change #106: Sure a lot of this comes down to the strong order performance that we saw in the second quarter and when we book that for delivery in Q3 Q4 for the ex China business.

Peter Arduini: So there's not obviously a one-to-one match. But I'll tell you what we did. So what we've done is we have ourselves force going out to all 31 of the provinces, all of our big customers. And actually asking the questions when you're going to buy what you're going to buy, what that's going to look up. And we kind of roll that all up for each 31 Providence and try to understand from what they're saying, what the timing would look like. And then based on that, understand how long it takes to tender, how long it takes to get to order, how much time then to actually do an install based on the mix.

Speaker Change #107: Okay. Thank you.

Speaker Change #107: Thank you so much. Our next question comes from the line of Patrick Wood.

Patrick Wood: With Morgan Stanley. Please proceed.

Speaker Change: Brilliant. Thank you so much for taking the questions.

Speaker Change #118: Maybe taking a step back and talking about revenue confidence generally.

Patrick Wood: Apologize if I heard this wrong I thought you guys mentioned that Q3 was something like plus one organic and so.

Patrick: Patrick about 45% of our revenue is recurring revenue either in the form of services or pdx and I would say the volatility around these categories is reasonably low we have decent predictability now the remaining 55% is equipment and so.

Speaker Change #110: The implied Q4 step up quantitatively how much is a function of ultrasound launches relative to the strong U S imaging market.

Speaker Change #110: Apologies if I missed this earlier, but if you could just unpack the <unk> that would be really helpful.

Jay Saccaro: And when we do that roll up, we do think there's going to be orders coming. But we just don't think that there's enough time on the clock from the sales standpoint. And to Jay's point, we might be wrong, but we're not in the business of trying to guess. And we just thought it prudent to take it out. It's just a chance that it comes back to questions. Why was it in there in the first place? You know, like a lot of points as you put things into the guidance at the start. It was at the start of this year; it didn't seem like something that was back certain at the start.

Speaker Change: Sure a lot of this comes down to the strong order performance that we saw in the second quarter and when we book that for delivery in Q3 Q4 for the ex China business.

Speaker Change #129: For us as we think about equipment one of the things. We look at is the secured rate, which is the equipment that we have in the backlog that scheduled for a given quarter.

Speaker Change: Maybe taking a step back and talking about revenue confidence generally.

Speaker Change #129: Over the last four quarters, we've had around 75% of our revenue in this secured rate coming from the backlog with the other 25% sold and installed in the quarter right. So really 25% of the equipment is up for grabs in a given quarter Thats a phenomenon again that we see.

Speaker Change: Patrick about 45% of our revenue is recurring revenue either in the form of services or pdx and I would say the volatility around these categories is reasonably low.

Jay Saccaro: So I'm just trying to figure out how much more you would have taken down. Yeah, fair look, very fair question. Keep in mind, in 02, when stimulus came within four to six months, it ramped unbelievably quickly. And so I think as we started the year, it wasn't super clear what, if there was going to be stimulus or not, I think you may recall. But as we got closer to Q2, the question is, if it follows the same ramp, it's going to probably be within this year. What's new is the fact that when it is slower and someone's deciding to buy, if you buy something now, you may not get the 30, 40, 50% value from the government to actually support your sale.

Speaker Change #101: <unk> predictability now the remaining 55% is equipment and so for US as we think about equipment. One of the things. We look at is the secured rate, which is the equipment that we have in the backlog that scheduled for a given quarter.

Speaker Change: I'm really speaking in each of the quarters as we look at the second half of the year, we see this similar.

Speaker Change: Not slightly better than the historic 70, 525 split going into the second half and so really what the Q4 step up Theres a normal step up from Q3 to Q4, but in specific as it relates to why we have this high level of confidence it comes down to the backlog and when we're expecting those deliveries.

Speaker Change #101: Over the last four quarters, we've had around 75% of our revenue in this secured rate coming from the backlog with the other 25% sold and installed in the quarter right. So really 25% of the equipment is up for grabs in a given quarter. That's a phenomenon again that we see.

Speaker Change: To take place.

Speaker Change: It really that's the driver around the step up of course to your point, we're going to see continued performance on some of the new product launches. We're also expecting to see continued robust performance out of the U S market, but again the analytics that we have really supports this Q4 step up which we feel good about.

Speaker Change #101: Generally speaking in each of the quarters as we look at the second half of the year, we see this similar.

Speaker Change #101: Not slightly better than the historic 70, 525 split going into the second half and so really what the Q4 step up Theres a normal step up from Q3 to Q4, but in specific as it relates to why we have this high level of confidence it comes down to the backlog and when we're expecting those deliveries.

Jay Saccaro: So naturally, you're going to wait to kind of make a decision to see what stimulus is. That's really the difference here in the calculation that I don't think anybody saw that would take that much longer. I mean, the only thing to add is this is not even like so, we're seeing a depressed level of demand relative to normal as people await clarity. We think the stimulus is a good, positive thing long term, but in the market, as we saw it in Q2, as we see Q3 order to date, it is depressing activity in the market thus far.

Speaker Change #110: I think the other point you touched on a J as with some of the share gains we've had on some of the larger equipment a year ago. We are actually have now service contracts growth and we're expecting our service contract growth during the second half not just expecting we could see it's already in the books, we will step up a few points in the second half and that has a higher margin and obvious.

Speaker Change #101: To take place.

Speaker Change: So really that's the driver around the step up of course to your point, we're going to see continued performance on some of the new product launches. We're also expecting to see continued robust performance out of the U S market, but again the analytics that we have really supports this Q4 step up which we feel good about.

Speaker Change: Slate.

Speaker Change: It's already on the books.

Speaker Change #109: Yes, good point on the warranty role very one quick follow up it's been a few years since I around this math that the U S installed base last time I tried to back it out I got the average age is something like seven years pretty old I don't know if you have any instinct on how that number kind of hit series.

Jay Saccaro: And so that's why we made the assumption that we did.

Speaker Change #116: I think the other point you touched on a J as with some of the share gains we've had on some of the larger equipment a year ago. We are actually have now service contracts growth and we're expecting our service contract growth in the second half that just expecting we could see it's already in the books.

Unknown Attendee: Okay, no, just to the sounds like an air pocket, so the situation for this period. I'm not super helpful. Thanks a lot, guys. Thank you, thank you.

Speaker Change #157: Yes, I think it obviously varies quite a bit by modality. It varies by company to based on.

Unknown Attendee: Thank you so much.

Unknown Attendee: Our next question comes from the line of Patrick Wood with Morgan Stanley. Please proceed. Brilliant. Thank you so much for taking the questions. Apologies if I heard this wrong. I thought you guys mentioned the Q3 was something like plus one organic.

Speaker Change #123: If you're taking a look at your own installed base or the overall I think in average, it's a little bit older than that.

Speaker Change: Step up a few points in the second half and that has a higher margin and obviously.

Speaker Change #116: We have some modalities, particularly in MLR, where it's probably even a few years older than that and so thats really boding well right now for us doing upgrades and stuff on conversion.

Speaker Change: It's already on the books.

Speaker Change #109: Yes, good point on the warranty role very one quick follow up it's been a few years since I ran the math that the U S installed base last time I tried to back it out I got the average age at something like seven years pretty old I don't know if you have any instinct on how that number kind of hysteria.

Patrick Wood: And so of the implied Q4 step up, qualitatively, how much is a function of, you know, those ultrasound launches relative to the strong US imaging market? Apologies by Mrs. Earlier, but if you could just unpack the 4Q, that would be really helpful. Sure, a lot of this comes down to the strong order performance that we saw in the second quarter. And when we book that for delivery in Q3, Q4 for the X China business, maybe taking a step back and talking about revenue confidence generally. Patrick, about 45% of our revenue is recurring revenue, either in the form of services or PDFs.

Speaker Change #116: We believe when we take a look at the all of ours plus the install base. There is actually a reasonable amount of replacement cycle needed because of the age.

Speaker Change #111: Yes, I think it obviously varies quite a bit by modality. It varies by company to based on.

Brian: Brian Thank you.

Brian: Thank you.

Speaker Change #145: And our last question is coming from the line of Suraj Kalia with Oppenheimer <unk> Company. Please proceed.

Speaker Change #125: If you're taking a look at your own installed base or the overall I think in average, it's a little bit older than that.

Suraj Kalia: Good morning, Peter J can you hear me all right.

Speaker Change #113: We have some modalities, particularly in MLR, where it's probably even a few years older than that so that's really boding well right now for us doing upgrades and stuff on conversion, but we believe when we take a look at all of ours plus the install base there is actually a reasonable amount of replacement cycle.

Peter J: We can good morning.

Brian: So.

Suraj Kalia: Thank you for taking my questions and bigger I'll throw them both of them you guys. This way and both of these questions designed really for assessing the differential impact So first China, Peter I wanted to piggyback with David's question from earlier.

Jay Saccaro: And I would say the volatility around these categories is reasonably low. We have decent predictability. Now the remaining 55% is equipment. And so for us, as we think about equipment, one of the things we look at is the security rate, which is the equipment that we have in the backlog that's scheduled for a given quarter. Over the last four quarters, we've had around 75% of our revenue in this secured rate coming from the backlog, with the other 25% sold and installed in the quarter, right? So really 25% of the equipment is up for grabs in a given quarter.

Speaker Change #113: Needed because of the age.

Speaker Change #122: Your competitors are talking about value partnerships local for local and maybe set the stage.

Brian: Brian Thank you.

Brian: Thank you.

Speaker Change #121: Thank you and our last question is coming from the line of Suraj Kalia with Oppenheimer <unk> Company. Please proceed.

Brian: When China opens up.

Brian: <unk>.

Speaker Change #143: The rising tide lift everyone equally or do you think there will be a differential impact.

Suraj Kalia: Good morning, Peter J can you hear me all right.

Speaker Change #154: Impact and part of me is also thinking.

Peter J. Arduini: We can good morning.

Speaker Change #147: It was the book to build specifically within China looking for different people.

Speaker Change:

Suraj Kalia: Thank you for taking my questions and Peter I'll throw them both of them you guys. This way and both of these questions are designed really for assessing the differential impact.

Speaker Change #114: And how should we think about when China opens up what is the differential impact.

Speaker Change #114: Peter That's one question and I'll throw the second one also quickly.

Suraj Kalia: So first on China, Peter I wanted to piggyback with David's question from earlier.

Jay Saccaro: That's a phenomena again that we see, generally speaking, in each of the quarters. As we look at the second half of the year, you know, we see this similar. If not slightly better than the history storage, 75, 25 split going into the second half. And so really what the Q4 step up, there's a normal step up from Q3 to Q4. But in specific, as it relates to why we have this high level of confidence, it comes down to the backlog. And when we're expecting those deliveries to take place. So really, that's that's the driver around the step up.

Speaker Change #128: Renal pharmaceuticals again your competitors are talking about pharmacy networks that give them an edge in radiopharmaceuticals.

Speaker Change #131: Your competitors are talking about value partnerships local for local and maybe set the stage.

Speaker Change #152: Help us understand what's he's buffers for for growth in this segment, especially given what Medicare is doing thank you for taking my questions.

Speaker Change #115: When China opens up.

Suraj Kalia: Right.

Speaker Change #120: The rising tide lift everyone equally or do you think there will be a differential impact in part of means is also thinking how is the book to build specifically within China looking for different people.

Speaker Change #134: Sure I would say look on China, I don't know if I have any better crystal ball than anyone else.

Speaker Change #126: We are making the assumption that.

Speaker Change #114: And how should we think about when China opens up what is the differential impact.

Speaker Change #130: A rising China will benefit everyone at some level. Obviously, there is a lot of local competition. There is multinational players I think everybody will play at a different point.

Speaker Change #114: Peter That's one question and I'll throw the second one also quickly.

Jay Saccaro: Of course, to your point, we're going to see continued performance on some of the new product launches. We're also expecting to see continued robust performance out of the US market. But again, the analytics that we have really supports this Q4 step up, which we feel good about. I think the other point you touched on, and Jay, is with some of the share gains we've had on some of the larger equipment a year ago, we have actually have now service contracts growth. And we're expecting our service contract growth in the second half, not just expecting; we can see it.

Speaker Change #122: Your weight reading pharmaceuticals again.

Speaker Change #117: <unk> talking about pharmacy networks that give them an edge in radiopharmaceuticals.

Speaker Change #150: We've been manufacturing for over 35 years, we source locally for the in China market and so we believe we can compete just like a local company and we're very focused on as you move into the non coastal cities into the west areas that you need to actually be even more.

Speaker Change #123: US understand GE is buffers for for growth in this segment, especially given what Medicare is doing thank you for taking my questions.

Speaker Change #130: Sure I would say look on China, I don't know if I have any better crystal ball than anyone else I think we are making the assumption that.

Jay: More of a value based product and capabilities and so theres two sides of this very high end and also value and I think we've got the type of lineup that we can be competitive there, but I don't think I have any better insights relative to that on how China will play out Jay I don't know if you want to add any comments there sure I mean I think.

Jay Saccaro: It's already in on the books. We'll step up a few points in the second half. And that has a higher margin. And obviously, it's already in the books. Yeah, good point on the warranty role.

Speaker Change #123: A rising China will benefit everyone at some level. Obviously, there is a lot of local competition theres multinational players I think everybody will play at a different point.

Unknown Attendee: Very one quick fall up.

Unknown Attendee: It's been a few years since I ran this math, but the US and still base lost when I tried to back it out. I got the average age. It's something like seven years, so pretty old. I don't know if you have any instincts on how that number kind of hits here. Yeah, I think it obviously varies quite a bit by modality. It varies by company, too. You know, based on if you're taking a look at your own install base or the overall, I think, in average, it's a little bit older than that. We have some modalities, particularly in MR, where it's probably even a few years older than that.

Speaker Change #118: We've been manufacturing for over 35 years.

Jay: Watch it over time, but we feel very good about the share position that we've been able to protect over time and a lot of that comes down to the manufacturing that we do in China for China. The large teams that we have on the ground are Pete described so from a share standpoint, we've been we've been fairly effective thus far.

Speaker Change #114: We source locally for the in China market and so we believe we can compete just like a local company and we're very focused on as you move into the non coastal cities into the west areas that you need to actually be even more of a value based products and capabilities and so theres two sides is very high.

And so as we look at the next stimulus we have all reasons to believe we will be able to participate in that market going forward and we're designing plans to execute on that.

Jay: And it also value and I think we've got the type of lineup that we can be competitive there, but I don't think I have any better insights relative to that on how China will play out Jay I don't know if you want to add any comments there sure I mean I think.

Speaker Change #156: So if you switch to your question relative to kind of Radiopharmaceuticals and look are we will spend again more time on this at our Investor day, but again, if you think about what makes us unique everything from cyclotron and capabilities for on site generation of your own.

Unknown Attendee: And so that's really voting well right now for us doing upgrades and stuff on conversion. But we believe when we take a look at the whole of ours plus the install base, there's actually a reasonable amount of replacement cycle needed because of the age. Thank you.

Jay: Watch it over time, but we feel very good about the share position that we've been able to protect over time and a lot of that comes down to the.

Jay: The manufacturing that we do in China for China. The large teams that we have on the ground are Pete described so from a share standpoint, we've been we've been fairly effective thus far and so as we look at the next stimulus. We have all reasons to believe we will be able to participate in that market going forward and we're designing plans too.

Speaker Change #153: Its hopes at an institution.

Suraj Kalia: In our last question, it is coming from the line of Suraj Kaliat with Oppenheimer and Company. Please proceed. Morning, Peter, Jay. Can you hear me all right? We can. Good morning. So thank you for taking my questions, and Peter, I'll throw both of them your guys' way. And both of these questions are designed really for assessing the differential impact. So, first on China, Peter, I wondered a piggyback on David's question from earlier. Your competitors are talking about value partnerships, local for local, and maybe set the stage when China opens up. Right? Will the rising tide lift everyone equally?

Jay: We're one of the very few companies that kind of has that as well as the <unk> technology and pets at CET, Pat <unk> and actually in the spec camera world becomes Super important and multi had 10 plus head system that allows you to do some of these oncology staging drugs and again, if you don't have that that part of the.

Jay: To execute on that.

Speaker Change #126: So if we switch to your question relative to kind of Radiopharmaceuticals and look are we will spend again more time on this at our Investor day, but again, if you think about what makes us unique everything from cyclotron.

Jay: Exam could be an hour and a half where on our system, it's 15 minutes.

Jay: There's phases of that.

Speaker Change #149: Network, we do have a distribution structure. There are some other players that have a much larger distribution structure I would argue with the CMS changed the real value here is and if you can distribute it is do you actually make it and so we actually make these molecules that.

Speaker Change #126: And capabilities or onsite generation of your own isotopes at an institution. We're one of the very few companies that kind of has that as well as the <unk> technology and pets at CET, Pat <unk> and actually in the spec camera world becomes Super important a multi had 10 plus had system.

Peter Arduini: Or do you think there will be a differential impact? And part of me is also thinking how is the book to build specifically within China, looking for the different people? And how should we think about when China opens up? What is the differential impact? Peter, that's one question, and I'll throw the second one also quickly in your way.

Speaker Change #149: In some way is going to be transformational relative to diagnosis of certain diseases and you could argue they'd been handicapped because they haven't been given their fair share of reimbursement for the value. They create it's a preliminary rule, we believe thats going to come into effect on January one if it does.

Speaker Change #126: It allows you to do some of these oncology staging drugs and again, if you don't have that that part of the exam could be an hour and a half where in our system. It's 15 minutes. So there's phases of that.

Speaker Change #149: We do think that youre going to definitely see significantly more growth on these molecules than we had estimated they would being treated as a supply so more to come and obviously that gives us more energy to say this is a space to invest and obviously continue to build out on thanks for your question.

Speaker Change #126: Network, we do have a distribution structure. There are some other players that have a much larger distribution structure I would argue with the CMS changed the real value here isn't if you can distribute it is do you actually make it and so we actually make these molecules that.

Jay Saccaro: and pharmaceuticals again, you know, your competitors are talking about pharmacy networks, you know, that give them an edge in radio pharmaceuticals. Help us understand GE's buffers for growth in the segment, especially given what Medicare is doing. Thank you for taking my questions. Sure. I would say, look on China. I don't know if I have any better crystal ball than anyone else. I think we are making the assumption that, you know, a rising China will benefit everyone at some level. Obviously, there's a lot of local competition. There's multinational players. I think everybody will play at a different point.

Speaker Change #149: Okay.

Speaker Change #114: In some way is going to be transformational relative to diagnosis of certain diseases and you could argue they've been handicapped because they haven't been given their fair share of reimbursement for the value. They create it's a preliminary rule. We believe that's going to come into effect on January 1st if it does.

Speaker Change #159: Thank you and this concludes the Q&A session. Please proceed with any closing remarks.

Speaker Change #157: Thank you everyone for joining us today, and we look forward to connecting with you in the coming days at one of our conferences in the next few months as a reminder, we will host our Investor day in New York on November 21, Thanks, so much for listening.

Speaker Change #114: We do think that youre going to definitely see significantly more growth on these molecules than we had estimated they would being treated as a supply so more to come and obviously that gives us more energy to say this is a space to invest and obviously continue to build out on thanks for your question.

Speaker Change #158: And thank you all who participated in today's conference and you may now disconnect.

Peter Arduini: You know, we've been manufacturing for over 35 years. We will source locally for the in China market. And so we believe we can compete just like a local company. And we're very focused on, as you know, you move into the non-coastal cities into the West areas that you need to actually be even more of a value-based product and capabilities. And so, you know, there's two sides: that's very high end and also value. And I think we've got the type of lineup that we can be competitive there. But I don't think I have any better insights relative to that on how China will play out.

Suraj Kalia: Okay.

Speaker Change #127: Thank you and this concludes the Q&A session. Please proceed with any closing remarks.

Speaker Change #129: Thank you everyone for joining us today, and we look forward to connecting with you in the coming days at one of our conferences in the next few months as a reminder, we will host our Investor day in New York on November 21, Thanks, so much for listening.

Jay Saccaro: Jay, I don't know if you want to add any comments. Sure. I mean, I think we'll watch it over time. But we feel very good about the share position that we've been able to protect over time. And a lot of that comes down to me. We've been down to the manufacturing that we do in China for China, the large teams that we have on the ground that Pete described. So, from a sheer standpoint, you know, we've been we've been fairly effective thus far. And so, as we look at the next stimulus, you know, we have all reasons to believe we'll be able to participate in that market growing forward.

Speaker Change #128: And thank you all who participated in today's conference and you may now disconnect.

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Yes.

Suraj Kalia: Yeah.

Suraj Kalia: [music].

Suraj Kalia:

Jay Saccaro: And we're designing plans to execute on that.

Peter Arduini: So if you switch to your question relative to kind of radio pharmaceuticals and look, our we'll spend again a more time on this at our investor day. But you know, again, if you think about what makes us unique, everything from cyclotrons and capabilities for on-site generation of your own isotopes at an institution. We're one of the very few companies that kind of has that as well as the pet technology and petsit CT pet MR. And actually in the spec camera world becomes super important and multi head, you know, 10 plus head system that allows you to do some of these oncology staging drugs.

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Peter Arduini: And again, if you don't have that, that part of the exam could be an hour and a half. We're on our system that's 15 minutes. So there's phases of that, you know, network. We do have a distribution structure. There are some other players that have a much larger distribution structure. I would argue that with the CMS change, the real value here isn't if you can distribute it. Is that, do you actually make it? And so we actually make these molecules that, you know, in some way it's going to be transformational relative to the diagnosis of certain diseases.

Peter Arduini: And you could argue they've been handicapped because they haven't been given their fair share of reimbursement for the value they create. It's a preliminary rule. We believe that's going to come into fact on January 1st. If it does, we do think that you're going to definitely see significantly more growth on these molecules than we had estimated they would be treated as a supply. So more to come. And obviously, that gives us more energy to say this is a space to invest in and obviously continue to build out on. Thanks for your question. Thank you.

Unknown Attendee: And this concludes the Q&A session. Please proceed with any closing remarks. Thank you, everyone, for joining us today. And we look forward to connecting with you in the coming days at one of our conferences in the next few months. As a reminder, we'll host our Investor Day in New York on November 21st. Thanks so much for listening. And thank you all who participated in today's conference, and you may now disconnect.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Yeah.

Suraj Kalia: [music].

Suraj Kalia: Yeah.

Suraj Kalia: [music].

Suraj Kalia: No.

Suraj Kalia: [music].

Suraj Kalia: Sure.

Suraj Kalia: Yes.

Suraj Kalia: Yeah.

Suraj Kalia: [music].

Suraj Kalia: Yes.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: Yes.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Yes.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Yes.

Suraj Kalia: Okay.

Suraj Kalia: Yes.

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Yes.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: Yes.

Suraj Kalia: Okay.

Suraj Kalia: Yes.

Suraj Kalia: Okay.

Suraj Kalia: Right.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: Yeah.

Suraj Kalia: Thanks.

Suraj Kalia: Okay.

Suraj Kalia: Yeah.

Suraj Kalia: Okay.

Suraj Kalia: Yes.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Yeah.

Suraj Kalia: Okay.

Suraj Kalia: Yes.

Suraj Kalia: Okay.

Suraj Kalia: Yes.

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: Hum.

Suraj Kalia: Okay.

Suraj Kalia: Yes.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Sure.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: Yes.

Suraj Kalia: [music].

Suraj Kalia: Yes.

Suraj Kalia: [music].

Suraj Kalia: Thanks.

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: Yes.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Yes.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: Yes.

Suraj Kalia: Okay.

Suraj Kalia: Yes.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: Yes.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: Yes.

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Yes.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: [music].

Suraj Kalia: Okay.

Suraj Kalia: [music].

Speaker Change #133: Good day, everyone and thank you for standing by welcome to GE Healthcare's second quarter 2024 earnings Conference call.

Speaker Change #133: This time, all participants are in a listen only mode.

Speaker Change #133: The speaker's presentation, there will be a question and answer session to participate you will need to press star one one on your telephone you contain here message advising you hand this waste to withdraw your question simply press Star. One again, please be advised that today's conference is being recorded.

Carolynne Borders: I will hand, the call over to the Chief Investor Relations Officer, Caroline borders you may begin.

Carolynne Borders: Thanks, operator, good morning, and welcome to GE Healthcare's second quarter 2024 earnings call I'm joined by our President and CEO, Peter Arduini, and Vice President and CFO Jay Zuccaro. Our conference call remarks will include both GAAP and non-GAAP financial results.

Carolynne Borders: Reconciliations between GAAP and non-GAAP measures can be found in today's press release and in the presentation slides available on our website.

Carolynne Borders: During this call we will make forward looking statements about our performance.

Carolynne Borders: Statements are based on how we see things today.

Speaker Change #135: 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.

Peter: Thanks, Karen and thanks to all those joining us today.

Peter: In the second quarter, we delivered 1% organic revenue and 3% orders growth with all segments contributing we also expanded margins despite headwinds from the China market.

Peter: We saw particular strength in the U S. Given replacement cycles and increased use of imaging across disease stage for diagnostics and resilience in the ultrasound market.

Peter: Excluding China global revenue growth was 4% and orders growth was 6%.

Carolynne Borders: We believe we're gaining market share in each of our segments and we are continuing to invest in products and services that will accelerate growth in the future.

Carolynne Borders: As it relates to China performance, we previously communicated that the region will experience negative sales growth in the first half as we faced a challenging compare.

Carolynne Borders: At the time, we expected positive sales growth in the second half today, a prolonged timing of the rollout of the new stimulus announced earlier this year is impacting timing of orders and sales.

Carolynne Borders: We expect a continued sales decline in China year over year in the second half.

Carolynne Borders: And we anticipate growth in China will be negative for the year.

Carolynne Borders: As a result, we're lowering our total company full year organic revenue growth guidance. It is important to note that despite this revenue reduction we are maintaining our EPS guidance for the year.

Carolynne Borders: Although we're disappointed with the second half reduction and sales growth. This is a temporary challenge and we expect to see China market orders recovery later in the year.

Carolynne Borders: We continue to view this market as an attractive long term opportunity.

Carolynne Borders: While China weighed on orders and revenues, we are encouraged by our margin performance in the quarter.

Carolynne Borders: Our team has embraced lean and identified process and product improvements at the end of 2023 and the first half of 2024.

Carolynne Borders: We're now seeing those benefits coming through our P&L, along with increased customer satisfaction, ultimately, resulting in higher win rates in products and services. We're.

Carolynne Borders: We're making great progress executing improvements that deliver better value to our customers and patients.

Carolynne Borders: Eliminating waste leveraging continuous improvement or kaizen.

Carolynne Borders: We run approximately 400 sessions throughout the year and recently completed our global CEO Kaizen.

Carolynne Borders: During the week, we held 28 events across our sites for my leadership team and I joined.

Carolynne Borders: Colleagues to drive and execute process changes and improvements.

Carolynne Borders: It is a key aspect of our good qiagen.

Carolynne Borders: Teams were focused on growth cost and working capital improvements some of which have immediate impact at the end of the week, while others will drive impact later in the year.

Carolynne Borders: One of our cost improvement kaizen, a team consisting of engineering quality and sourcing go to plan for a high running Cte platform that will reduce overall cost by 23% with 15% coming out in the first year.

Speaker Change #141: In Waukesha my team focused on improving our responsiveness to customer demand as well as cost savings for the Cta and <unk> products that we manufacture there.

Carolynne Borders: We create a visual management tool called a high junk of board that shows plant capacity system availability and customer orders.

Carolynne Borders: A new tool will help us level load production optimized manufacturing flow and meet customer demand while shrinking the lead time on our critical omni legend at C T system by 31%.

Carolynne Borders: And reduce future cost to create these scanners. It was an energizing week for all.

Carolynne Borders: Leveraging our productivity progress. This year, we are raising our adjusted EBIT margin guidance and we're reaffirming our outlook for adjusted EPS and free cash flow.

Carolynne Borders: Jay will discuss our outlook in greater detail later in the call.

Jay Saccaro: Moving to commercial execution milestones as I mentioned, we had a strong quarter in the U S, where we secured more than $800 million of multi modality equipment software and service contracts the.

Jay Saccaro: The U S market continues to be robust, particularly in imaging.

Carolynne Borders: <unk> and ultrasound we.

Speaker Change #138: We saw strong orders and sales growth in the region and continue to see a healthy pipeline for growth.

Speaker Change #138: In July we made two important announcements to develop proprietary AI tools to help expedite clinical and operational efficiencies. This included our agreement to acquire the AI division of intelligent ultrasound developer of AI tools for women's health ultrasound products and a strategic collaboration with <unk>.

Speaker Change #136: Amazon Web services to build foundation models, and generative AI tools to streamline hospital operations and care delivery.

Speaker Change #136: Now I'll pass it to Jay who will take us through the details of our second quarter performance Jay.

Jay: Thanks, Pete let's start with our financial performance on slide four.

Jay: For the second quarter of 2020 for Rev.

Jay: Revenues of $4 $8 billion were up 1% organically year over year recall this quarter's results compared to 9% growth in the second quarter of 2023.

Speaker Change #140: And we experienced easing supply chain constraints.

Speaker Change #140: Can see from our filing this morning to continued market headwinds in China impacted total company sales growth in the quarter by approximately 300 basis points, meaning global sales growth excluding China.

Speaker Change #140: Proximately, 4%.

Speaker Change #136: Organic orders growth was solid increasing 3% year over year, driven by strength in the U S and rest of world.

Speaker Change #136: Excluding a 300 basis point impact of China on orders order growth would have been 6%.

Speaker Change #136: Orders dollars continued to outpace sales leading to a strong total company book to Bill of one point over six times versus 1.04 times last year as a reminder, equipment only book to Bill is higher than total company book to Bill.

Speaker Change #136: We exited the second quarter with a healthy backlog of $19 billion, including strong services growth.

Speaker Change #136: Adjusted EBIT margin was 15, 3% up 60 basis points year over year, driven by continued improvement in gross margin with productivity and price.

Speaker Change #136: Second quarter, adjusted EPS was $1 up 9% year over year, reflecting adjusted EBIT growth and lower interest expense.

Speaker Change #136: Free cash flow was in line with our expectations and was negative due to the timing of certain payments.

Speaker Change #136: On slide five let's take a closer look at segment revenue performance for the second quarter.

Speaker Change #142: We saw a very strong <unk> sales growth of 14% organically aligned to global procedural demand.

Speaker Change #136: China market headwinds negatively impacted both our imaging and ultrasound segments.

Speaker Change #136: Service revenue on a reported basis increased 2%.

Speaker Change #136: We continue to make very good progress on margin expansion, let's walk through this on slide six.

Speaker Change #136: In the quarter adjusted gross margin expanded.

Speaker Change #136: 110 basis points and adjusted EBIT margin expanded 60 basis points. The team has made significant progress utilizing lean capabilities to focus on margin accretive actions.

Speaker Change #136: As a result of these actions adjusted gross margin increased 100 basis to 110 basis points and adjusted EBIT margin grew 60 basis points through the first half of 2024.

Speaker Change #136: Gross margin was particularly strong in pdx with volume and stabilization of raw material costs and imaging gross margin expanded led by new product introductions.

Speaker Change #136: And our Pdx segment, we hosted a kaizen in our court facility in May which led to over $1 5 million doses of annual capacity improvement and cycle time reduction.

Speaker Change #136: This is another great example of how lean enables us to increase our volume and expand margins.

Speaker Change #136: E.

Speaker Change #143: We're focused on permanent cost optimization actions that are resulting in ongoing cost savings. For example, we've consolidated more than 40 vendors supporting our applications to one vendor as we signed a managed service agreement that has resulted in more than $40 million of annual.

Speaker Change #136: Savings.

Speaker Change #136: As we exit TSA as we're developing solutions specific to GE healthcare's needs for example, moving more to the cloud and reducing internal data centers as well as consolidating the number of devices we use.

Speaker Change #136: We expect this to drive an additional $20 million of savings in 2024.

Speaker Change #136: On the gross profit side, we drove mid single digit variable cost productivity across all segments in the quarter.

Speaker Change #136: In the second quarter, we invested more than $300 million in R&D growing 10% year over year, while expanding our margin.

Speaker Change #136: Recently introduced products with AI are driving higher margins now.

Speaker Change #139: Now I'll turn to segment performance, let's start with imaging on slide seven where we had flat organic revenue growth. This was against a difficult comparison to the prior year when sales were up 9% growth. In this segment was also impacted by China market headwinds.

Speaker Change #139: Segment EBIT margin was up 40 basis points year over year, we continue to make progress on enhancing gross margins through productivity and price while also investing in R&D origin.

Speaker Change #139: Margin improved sequentially by 130 basis points versus the first quarter of 2024 due to volume leverage.

Speaker Change #139: New product introductions are contributing to particular strength in U S product demand.

Speaker Change #139: Turning to ultrasound on slide eight organic revenue was down 1% year over year, primarily due to China market headwinds.

Speaker Change #139: <unk> EBIT margin decreased 120 basis points year over year, driven by lower sales in China and inflation.

Speaker Change #139: This was partially offset by cost productivity achieved through standardization and new product introductions.

Speaker Change #139: We continue to see solid customer demand, especially for our recently launched products.

Speaker Change #139: Okay.

Speaker Change #139: Patient care solutions on slide nine organic revenue was up 1% year over year, following 9% growth in the prior year.

Speaker Change #139: Segment, EBIT margin decreased 90 basis points year over year due to product mix productivity actions offset inflation with.

Speaker Change #139: With the expected contributions from new product introductions, and a healthy backlog, we are well positioned to drive future growth.

Speaker Change #139: Moving to pharmaceutical diagnostics on slide 10, we had another strong quarter generating 14% year over year organic growth driven by volume pricing and new product introductions.

Speaker Change #139: Segment EBIT margin of 31, 2% improved 450 basis points year over year, driven by sales volume productivity and pricing we're.

Speaker Change #136: We're pleased with the continued margin expansion in this segment.

Speaker Change #136: Security of supply remains top of mind for our customers and we're continuing to make investments to enhance global supply of contrast agents and radiopharmaceuticals to meet increased demand in particular, we are encouraged by positive developments in the molecular imaging market we.

Speaker Change #136: We saw continued acceleration of visit Mount dose is delivered in the U S. In the second quarter.

Speaker Change #136: These sales increased threefold.

Speaker Change #136: Turning to slide 11 on cash flow performance in the second quarter free cash flow was negative $182 million.

Speaker Change #136: Due to the normal timing of compensation and interest payments. We continue to expect strong cash generation for the full year free cash flow is expected to be substantially higher in the second half of the year relative to the first as a result of seasonality given higher volumes as well as the timing of certain supplier in <unk>.

Speaker Change #136: Compensation payments that occur earlier in the year.

Speaker Change #136: Our strong cash flow profile continues to provide us the flexibility to advance our growth strategy, while reinvesting in the business and executing a disciplined capital allocation strategy.

Speaker Change #136: Now, let's turn to our outlook on slide 12.

Speaker Change #146: Taken a prudent approach and are lowering our full year 2020 for organic revenue growth guidance to be in the range of 1% to 2% due to temporary market headwinds in China.

Speaker Change #136: Despite this reduction we're raising our guidance for adjusted EBIT margin expansion, which we now expect to be 60 to 90 basis points year over year associated with the continued momentum, we're seeing our productivity and optimization initiatives along with contribution from <unk>.

Speaker Change #136: We are reaffirming our expected our expectation for adjusted EPS in the range of $4 20.

Speaker Change #136: To $4 35.

Speaker Change #136: With growth of 7% to 11%.

Speaker Change #136: And free cash flow of approximately $1 $8 billion.

Speaker Change #136: We expect third quarter year over year organic revenue growth of approximately 1% and adjusted EBIT margin expansion to be relatively similar to second quarter, we would expect year over year organic revenue growth and adjusted EBIT margin in the fourth quarter to be the highest of the year as you think about.

Speaker Change #136: The year I would note that we expect the revenue headwind from foreign exchange to be less than 1% in 2024.

Speaker Change #136: Now I'd like to turn the call back over to Pete.

Pete: We'll dive deeper into some of what you see on the slide at Investor day, but today I'd like to focus on growth in pdx and imaging.

Pete: We're encouraged by the recent CMS reimbursement proposal and has potential to benefit patients in the U S are facing cancer cardiovascular and neurological diseases.

Pete: This step is expected to unlock the value of our radiopharmaceuticals and pad and spec scanners, ultimately, enabling more precise diagnostic and treatment planning for patients to give you. Some perspective for the last decade. These molecular imaging agents were treated as a supply with limited re.

Pete: Members met with prevented broad scale use assuming the new rule goes into effect on January one 2025, we expect CMS will begin paying market value for these agents some of which that have an average sale price of thousands of dollars the.

Pete: The change will give hospitals the needed reimbursement to cover their costs better.

Pete: Which has been a long standing challenge in this space.

Speaker Change #147: This comes at a time, when we continue to see momentum with existing radiopharmaceuticals, including that scan Isabel and sorry Ana.

Speaker Change #147: And the promise of future molecules, such as flip heard ads for cardiovascular disease we.

Speaker Change #147: We expect each of these products will benefit from the new reimbursement rule.

Speaker Change #147: As Jay mentioned visible doses continued to grow in the second quarter in the U S. With the recent FDA approval of banana mob, we anticipate even further uptick of our diagnostic amyloid pet agent.

Jay: This is still a small contributor to sales growth, but gives us optimism about its sales potential over the next few years.

Speaker Change #149: On the equipment side of pet imaging, we expanded our upgradable omni legend platform by introducing a smaller detector, providing upgrade ability and value. So customers can adopt the scanner to meet the evolving needs of their patients.

Speaker Change #144: We also introduced many trades magni, a small low cost cyclotron for in house production of tracers and radioisotopes and this will help regional hospitals with limited access to commercial distribution or larger hospitals was citing issues that prevent them from building the infrastructure needed to accommodate.

Speaker Change #144: A traditional sized cycle trough.

Speaker Change #144: Turning to slide 14.

Speaker Change #145: We're aligning our ultrasound and image guided therapy business to better position ourselves for how clinicians use these two modalities and hydro settings. For example, you can see how multiple products work in conjunction inside electrophysiology suite and when integrated in the workflow create a better experience for a customer.

Speaker Change #145: Immersing patients. These two businesses combined unlock more value than they do separate.

Speaker Change #145: We look we're looking forward to sharing more about this at Investor day.

Speaker Change #145: We also made strategic leadership appointments aligned to these changes as of July urged raw and Rod our previous head of ultrasound is leading imaging and fill Radcliffe head of image guided therapies is leading ultrasound and IGT rolling infill of deep industry knowledge.

Speaker Change #145: Global mindset and significant expertise with our products and operations and they are well positioned to lead our two largest businesses and are off to a great start.

Speaker Change #145: Before turning to Q&A on slide 15, I want to thank our team for their commitment to delivering for our customers in particular I'd like to thank our government affairs and policy team, who advocated for multiple years. The proposed CMS hospital outpatient rule for the benefit of patients.

Speaker Change #152: As I look ahead I'm optimistic for a few reasons one we have a strong backlog at $19 billion and with a prudent approach to our revenue guidance, we feel confident that we can deliver on our outlook.

Speaker Change #145: We're encouraged by overall capital equipment spend particularly in the U S. We delivered solid orders growth in the quarter at 3% or 6% excluding China.

Speaker Change #145: Our funnel of productivity opportunities is strong and we were able to raise our adjusted EBIT margin guidance due to our progress on these initiatives and there is still much more to do here.

Speaker Change #145: We're excited about the pipeline of innovation, we have that solves customer challenges enables improved patient care and sets us up well for growth in the years to come more about this in November at our Investor Day, and lastly, given these factors we're confident that we can deliver on our medium term goals with that we'd like to open up.

Speaker Change #145: Questions.

Speaker Change #145: Thank you Pierre I would like to ask participants to please limit yourself to one question and one follow up.

Speaker Change #154: Operators can you please open the line.

Speaker Change #162: Thank you and necessary reminder, that is star one line. If you do have a question and wait for your name to be announced.

Speaker Change #150: To remove yourself. Please press star one again, our first question is from Joanne Wuensch with Citi. Please proceed.

Joanne Karen Wuensch: Good morning, and thank you for taking the question I think I'll limit spend my question on China and.

Joanne Karen Wuensch: Trying to understand how you think about the pace of opening up.

Speaker Change #148: New orders from the stimulus program when do you anticipate it arriving and how as we put our 2025 models together do you think about this rolling into next year.

Speaker Change #158: Thank you.

Speaker Change #153: Thanks for.

Speaker Change #153: John It's Peter Thanks for the question.

Speaker Change #151: So as I mentioned in my prepared remarks stimulus program rollout in the details of those plans are taking longer than we estimate I think than many people estimated.

Speaker Change #157: Some background in 2000.

Speaker Change #151: 'twenty two when there was a previous rollout just from the central government. It came out pretty quickly I think it was around under six months from announcement to rollout that was kind of a predicate we base assumptions on in 'twenty for the rollouts, taking longer mainly because it's a combination of each of the 31 provinces in central.

Speaker Change #151: Government working together and so.

Speaker Change #151: It's taking longer to roll it out and we believe that that's going to be well into <unk>.

Speaker Change #151: Late 'twenty four before begins driving growth. So we've fundamentally taken that out of our numbers. We ultimately expect that this is going to be a positive catalyst for the China market and we believe it could have a positive impact on orders starting in late 'twenty four but we view this as limited sales <unk>.

Pat: Pat just on the time between tenders orders and sales to take place and so taking it out of our numbers for the year, we viewed as is prudent.

Klein: Klein in sales in the second quarter.

Jay: We actually saw something worse than that it's closer to $100 million.

Jay: So in fact, as we look at the first half of the year you can see in our disclosures China is down about 15%.

Speaker Change #156: And we've assumed really as we look to the rest of the year. There is going to be no real impact from China's stimulus sales and also we're kind of expecting a challenging market for the balance of the year and so when you. When you think about your guidance adjustment that we did as it relates to <unk> 24 at the midpoint of.

Speaker Change #156: The range of the 1% to 2% range, it's roughly a 500 million dollar impact in China relative to what we previously thought.

Speaker Change #155: When China starts stimulus starts to come through it will be a positive development, but we're not trying to time this or estimate the timing of of the stimulus package. We've taken it out on the positive side. We do believe that we are well positioned once stimulus starts coming through on to take advantage of that as Pete said.

Pete: So overall, we think we think the market is a good long term attractive market are clearly this year is challenging the only thing I would say as you know historically, China has been around for last year's roughly 14% of our business will be much less than that this year in the 11% to 12% range as we think about our current modeling.

Speaker Change #164: Thank you.

Speaker Change #161: Thank you.

Lawrence H. Biegelsen: Our next question comes from the line of Larry <unk> with Wells Fargo. Please proceed.

Lawrence H. Biegelsen: Good morning, Thanks for taking the question.

Larry: I wanted to start with the 24 guidance you know Jay as you mentioned and you lowered revenues by about $500 million, but maintain margins actually increased margins a little bit of maintain EPS. Though my question is how are you able to maintain margins and EPS given the revenue reduction I did have one follow up.

Lawrence H. Biegelsen: Great.

Larry: Thanks, Larry.

Speaker Change #166: So look I think you heard in our prepared remarks, a lot of emphasis on.

Speaker Change #160: Hi, then on lean culture on cost initiatives.

Speaker Change #163: We're really proud of that and I would say that that is the thing that has exceeded our expectations as we look at the bottom line throughout the year, we delivered 60 basis points of margin in the first half of the year against very low revenue growth.

Speaker Change #160: And in fact, we had a really good gross margin contribution year over year 120 basis points in the first half of the year and in the second quarter. The formula that we've talked about historically is one that we really delivered on we had roughly one point of positive impact and price them exactly where we hoped to be and then notably.

Speaker Change #160: Our variable cost productivity initiatives, and we talked a little bit about that more than offset inflation and then you saw highlights from some of the G&A initiatives really proud of the work that our team is undertaking some of those initiatives also contributed in the second quarter. So what happens in the back half of the year is more of that.

Speaker Change #160: Same on.

Speaker Change #160: In the third quarter, we will see similar margin expansion to move to what we saw in Q2 and then in the fourth quarter at the midpoint of the range. There is some tick up a more uptake I should say and margin expansion.

Speaker Change #160: And it's going to come through continued price some of these productivity initiatives offsetting inflation and these cost initiatives that we've had success and then I would also note that in the fourth quarter of last year, we had around 40 basis points of onetime R&D items, we don't expect to repeat so really that's the contours of the year as we think about.

Speaker Change #160: Margin improvement the.

Speaker Change #160: The one thing I would say is at the beginning of the year, we were cautious and we did risk adjust some of these productivity initiatives and some of these cost containment initiatives. So the question how do you offset $500 million, it's real execution against these initiatives delivering incremental profit.

Speaker Change #172: First is our expectations might they could take it as a companywide effort. It's highlighted by things like Kaizen initiative week that we had last week, but overall feel very good about the margin trajectory.

Speaker Change #169: That's helpful and Pete or Jay I heard your comments about confidence in the medium term goals any high level thoughts right now on 2025.

Speaker Change #168: Do you expect some catch up from China next year and you know are you still confident in the mid single digit.

Speaker Change #165: <unk> digit growth outlook. Thank you.

Speaker Change #170: Yeah, Larry Thanks for the question so as I mentioned in my closing comments that we feel confident in our midterm medium term goals that we've laid out both are our revenue and our profit goals profit obviously for the reasons that Jay laid out and really I would say on the growth side.

Speaker Change #193: We don't know what value China's going to create in 2025, obviously, it's probably going to be more than we had previously expected well see how that shakes out and it's not time to give guidance on that but that clearly will be a positive, but it's less about markets in my mind, it's more about the core changes we've made in the company our.

Speaker Change #165: <unk> execution on large integrated deals our capability to be able to sell more value get price be able to actually bring out new products that bring differentiated capabilities I just feel good about the hand, we're holding right now as we kind of finished this year out and move into.

Speaker Change #165: Not only just 25, but beyond that again just to make another comment relative to our Investor day in November it'll be our first as an independent company. We wanted to really highlight the products that we've been building behind the scenes with this increased R&D investment remember we've stepped up our percentage of R&D a couple of points over the last few years and so.

Speaker Change #165: M R and C. G in pad C T and monitoring and ultrasound all of our business areas, we've been investing in the pharmaceutical diagnostic or a new molecules coming out so we want to be able to tell that story.

Speaker Change #165: And so I feel good about the position that we're in and where.

Speaker Change #165: Again looking forward here to kind of delivering on this are our plans for the year and being in a well positioned over the next couple of years to continue to grow the company.

Speaker Change #165: Thanks, a lot.

Speaker Change #167: Thank you. Our next question comes from the line of Anthony Petrone Whitney Soho Group.

Anthony Charles Petrone: Thanks, maybe two part question here, one is going to be on.

Speaker Change #173: Orders and bookings and then the second will be on all Chalmers disease. So the order number plus 3% and book to Bill 1.06.

Speaker Change #181: It comes in despite the headwinds in China, and I think a lot of that has to do with just state of the U S market. So maybe just a little bit on the U S market as it relates to funnel specifically in the imaging and ultrasound segments.

Speaker Change #177: How much visibility visibility is there.

Speaker Change #182: And Ken this feasibly extend into 2025, and then for all Simers disease. There is theres a couple of blood based tests that had results out recently clearly visible as is at least in the early innings here of preferred imaging solution to onboard all summers disease patients. So how does all saw.

Speaker Change #175: <unk> disease play out from the <unk> side, when we consider new tests potentially coming in thanks.

Speaker Change #190: Maybe I'll, maybe I'll start with that and then turn it over to Pete for some additional color on orders in the Alzheimer's question.

Speaker Change #176: The 3% orders growth in the face of a decline in China I thought it was a really good result of orders, excluding China were 6% and the book to Bill as you pointed out actually the book to Bill for the quarter. One point out I think it was the highest since we've spun off.

Speaker Change #176: In the U S. We had a very strong quarter, we saw strong orders and sales growth and frankly in each of the segments orders growth outpaced sales growth in the U S.

Speaker Change #176: So really really nice market there the market continues to be robust we're.

Speaker Change #171: We're seeing pdx, putting very solid numbers up in line with procedure growth.

Speaker Change #180: And as we as you know we do a quarterly survey and then we also do work looking at all of the surveys out there in particular with respect to the U S and.

Speaker Change #180: And many of our customers are telling us and those surveys they plan to spend more on capital investments in the second half. So I think that's a really good backdrop as we look to deliver on the guidance that we just share and we're seeing growth in the equipment market in the U S. And we also feel very good about the share position that we've had we have relaunched a number.

Amit: <unk> of new products and ultrasound Amit So we're seeing.

Speaker Change #171: Real receptivity to some of the new products that we have in place. So overall, we feel quite good about the U S market, we feel good about the orders backdrop and then the other point I would note is backlog is up sequentially $300 million in that range at $19 billion. So we're keeping the backlog.

Speaker Change #171: At the level that we'd like to as we continue to grow grow the business are Pete what would you add to that.

Pete: No I think you've covered a J, but we just I think a train in the U S team just had a phenomenal quarter.

Pete: And it is about products, but it is about we've talked about the team itself.

Speaker Change #183: Talent upgrades that we put in place the new sales disciplines and processes and really our enterprise value proposition that we bring to our big IGN, we had quite a few larger wins.

Speaker Change #183: And again I'd, even signed some new product areas like in the vascular library, while we're winning.

Speaker Change #167: Growth in the IGT business and taking share that we havent realistically in previous years, but.

Speaker Change #167: It's an older installed base in the United States. So we think we actually have a pretty good.

Speaker Change #167: Replacement cycle, that's going to continue on.

Speaker Change #167: Signals from our customers, particularly Cfos that we survey and such are positive about the investments and the way. This works out is when you see big growth and a lot of the med Tech global businesses catheters and sites are in the pharma side ultimately that puts more pressure to buy more equipment, because youre, putting more patients through the system. So.

Speaker Change #179: We see that in delay coming through but are quite quite confident about how we see the U S market Anthony in your question on the Radiopharmaceutical side, you'll look I think we're going to see a lot of different diagnostics pop up in many of these different space.

Speaker Change #179: <unk>.

Speaker Change #187: How well they'll be accepted and integrated into <unk> into practice I think remains to be seen I think as it relates to Alzheimer's specifically I think you know them all the baseline tests were done off of pad, a pre and post being able to actually see where the amyloid beta is actually see the elimination of it on scans.

Speaker Change #167: We believe is going to still be a hallmark of.

Speaker Change #184: Of the products and then again, depending on how well those therapies takeoff like most things there'll be lots of room for multiple products to continue to grow to do well I would point, though back to this broader point about the CMS changes that just took place again.

Speaker Change #167: If you were doing scans and your radio at your pharmaceutical product again in this case the radiopharmaceutical diagnostics you only receive may be a few hundred dollars for reimbursement on it and now you received something closer to the actual list price which could be.

Speaker Change #167: A dollars all of a sudden the economics for a health care provider to move to that space makes a lot of sense and if you have a larger distribution network of multiple molecules that you're bringing to that customer you can contract at a larger scale and that's really what we're super excited about obviously alzheimers being one.

Speaker Change #167: Part of that but breast cancer.

Speaker Change #167: Parkinson's disease cardiovascular disease down the road all of those we look and say with some of these changes that have taken place we're optimistic about what that can bring.

Speaker Change #167: Yes.

Speaker Change #167: Thank you.

Speaker Change #178: Thank you.

Speaker Change #178: Our next question comes from the line of Vijay Kumar with Evercore ISI.

Speaker Change #167: Yeah.

Vijay Muniyappa Kumar: Hi, guys. Good morning, and thank you for taking my question.

Speaker Change #191: My first question was on guidance with revenues cut by 250 basis points and operating margins tweak up 10 basis points.

Speaker Change #189: And it doesn't really explain the EPS rate or any below the line assumptions change tax.

Speaker Change #195: Expense other other income.

Speaker Change #194: No I mean broadly speaking.

Speaker Change #185: The the below the line assumptions are unchanged and so as we look at it we have a revenue reduction it's supported by what we've put forth I think.

Speaker Change #185: It's the it is a fairly and continues to be a fairly wide EPS range.

Speaker Change #185: And a lot of that reflects the uncertainty that we see in China. So no major changes below the line.

Speaker Change #185: But in and feel good about you know in particular, given the strong performance in the first half along with the continued line of sight to some of these additional productivity initiatives, we feel good about delivering on this range.

Pete: Understood and Pete one for you I know you've spoken about new product momentum.

Pete: NPI.

Pete: Talk about some of these are new products that youre launching about to launch I think you've had a bunch of software side as well and maybe lift them out and would've incremental share as we look at back half into the medium term.

Speaker Change #199: Yes, if you look I think we've got across the business, we've had some multiple updates and upgrades across the product family line.

Speaker Change #199: Coming to value MLR products that we've just introduced come out with a significant amount of upgrade products I think one of the thing thats driving a lot of.

Pete: Growth, particularly in EMR is our upgrades to our deep learning module in that in that case, the <unk> capability and installed base upgrades.

Pete: The ultrasound space, particularly in general imaging, we introduced quarter back quite a few new versions updated that product line.

Pete: That has done quite well this is the logic clients. So theres almost four different derivatives there plus in our volumes saw in women's Health Carolina are we're seeing those pacing on track if not better you might have seen our revenue in ultrasound.

Pete: Was was was a little light in this particular quarter, but as we go into the second half we expect that's going to pick up back our orders was positive we had good orders.

Pete: Pick up here. So that's a positive sign as we look forward I mentioned vascular and IGT, we're doing quite well with our surgical C arm OFC business, there's a bunch of new software applications.

Pete: In room capabilities that bring almost cath lab like capabilities into a mobile CRM.

Sharon: Our alia platform, where we're doing quite well with which is which is growing Sharon I'd say on the PDL side.

Pete: Particularly on our monitoring systems that are in room, the new monitors themselves, where we're seeing some nice pick up so that's the that's the broader mix and then what I was mentioning at Investor Day, We'll talk about what we're going to see in the 25 through 27 range.

Speaker Change #167: We're thinking about where we are with a photon counting next generation MRI.

Speaker Change #188: Water capabilities within pet imaging just to give an example, so those are some of the bigger investments obviously, we've been making for the past few years and they're well on track and again will be a highlight of our investor day in November.

Speaker Change #196: That's helpful. Thank you guys.

P J: Thanks P J. Thank.

Speaker Change #201: Thank you.

Speaker Change #209: Our next question comes from the line of David Roman with Goldman Sachs. Please proceed.

David Harrison Roman: Thank you and good morning, everybody I wanted to dig into China, a little bit further.

David Harrison Roman: Understanding that the stimulus is a bit of a covenant no. Maybe we could just take a step back and you could talk a little bit about just underlying drivers in China, because if you look at some of the third party data it looks like the vast majority of the installed base across ultrasound Cte in EMR has been refreshed in the past four years. So how should we think about the medium term.

Speaker Change #197: Some underlying growth in China and is it more than just stimulus impacting the the outlook here.

Speaker Change #197: Yeah, David Good question as we look at China, Historically, we've seen this as a very robust growth market.

Speaker Change #214: Obviously at our Investor day, we talked about China growth of 6% to 8%.

Speaker Change #214: And we feel good long term about the growth dynamics in China, We had a very solid year last year with double digit growth and then we see a decline this year, but our decline this year is not related to.

Speaker Change #197: Age of installed base as we see it our decline this year is very much related to <unk>.

Speaker Change #197: Limited buying activity by hospitals as they await clarity on the stimulus.

Speaker Change #202: As it pertains to your specific comment on age of installed base and the one thing I would note about your comment is that a lot of the recent purchases in the timeframe that you referenced in the refreshed equipment were at lower end or county hospitals.

Speaker Change #200: Versus major institutions, where we have a higher presence and so as we look at the age of our installed base in areas like ultrasound and imaging. It is above the numbers that you described.

Speaker Change #200: And as you kind of consistent broadly speaking with global averages. So I do think there is a dynamic of the tier of hospital in play but.

Speaker Change #200: But overall, we think this will continue to be a really nice market for us long term I don't know if you'd add anything I think you covered it David just a couple of facts.

Speaker Change #200: As you know David I mean.

David Harrison Roman: The China population 1 billion or about $400 million have you say pretty good access there's a billion people that down. So we have a partnership with Sino farm with other broader distributor capabilities to be able to reach into that untapped market and so that will continue to be a growth area is probably also going to be.

David Harrison Roman: Part of some of the investments that the government is making the other tidbit is is that used equipment isn't actually allowed to be sold within China, and so there really isn't a recycling of used equipment around it ends up being all new equipment coming yet and so that actually if it has a.

David Harrison Roman: A higher effect on growth and in other markets, where particularly in the United States, where we have quite a bit of upgrades and movement around equipment that doesn't exist in in China. So when we look at the numbers I think we feel pretty good about what the longer term growth potential is just based on those facts.

Speaker Change #204: That's super helpful. And then maybe just a follow up on some of your comments about the U S. We've now heard a couple of companies talk about operating rooms, and other parts of the hospital facing capacity constraints you called out <unk> as an area of growth focus for you how should we think about kind of your tethering to <unk>.

Speaker Change #207: Some of these higher growth attractive end markets, where that structural heart or <unk> do we see that in your interventional imaging segments. So how should we think about the contribution to G. And then does that change any of your sort of strategic thought here from a business development standpoint.

Speaker Change #210: Areas of interest being you sit around the periphery of a lot of these procedures kind of going.

Speaker Change #204: Or into the implantable device or sort of a quote unquote inside the body side of things.

Speaker Change #205: Yes, David it's a really good question and obviously, we'll spend more time in some strategic settings on this but look at a high level. We have the strategy. We focus on we articulated is D. Three which again is smart integrated connected devices that work together around a given disease state or cure.

Speaker Change #211: Pathway and enable to drive more productivity or better outcomes with digital AI features and so if you take that EP example, you had the first part is having world class Electrophysiology labs that we can win the hardware and the reality of it is a few years ago, we probably didn't have all the right features we do now.

Speaker Change #205: So we think from a standpoint of winning those labs, we're going to win at a higher rate that we did in the past on the disease state side of electrophysiology itself, we actually have folks that are.

Speaker Change #205: Primarily focused on that to say how does ultrasound how does the EP devices. How does the actual data systems work together. So we can come up with a better solution and we are working on Thats. One of the main reasons that we created the IGT ultrasound alignment because theres a lot more cardiovascular benefits in <unk>.

Speaker Change #217: And everything from channel to the development side and to your broader point when you start thinking about disease stage, it opens or lends up to say where should I partner with this company more because if we do we could solve this customer problem or should I buy this asset because together these four things create more value and to answer.

Speaker Change #217: Right now we absolutely were expanding our horizons to think about what should be part of GE healthcare.

Speaker Change #215: Terrific. Thanks, so much and look forward to seeing you in November.

Speaker Change #205: You.

Speaker Change #213: Thank you.

Speaker Change #212: Next question comes from the line of Matt Taylor with Jefferies.

Matthew Charles Taylor: Hi, Thank you for taking my question.

Matthew Charles Taylor: I guess I had one question on the Pdx business, you talked a little bit about the Medicare changes, obviously, a big positive.

Speaker Change #205: For that space I guess I was wondering if that changes your thoughts on.

Speaker Change #208: The long term opportunity or the growth rate for the contract media or molecular imaging markets that you're in.

Speaker Change #222: And I was hoping you called out does the mill a couple of times.

Speaker Change #218: The last few calls with the great growth Youre seeing there if you could outline the opportunity for that or a short period as just to give us a better sense of.

Speaker Change #216: What they're contributing today or how you feel about them contributing to growth, especially next year as you launch period at.

Speaker Change #216: Sure maybe I'll start with a few comments and then turn it over to Pete as well.

Pete: Overall, the pdx business has been growing really well we.

Pete: We saw 14% in the second quarter, a lot of that relates to volume about 10% of that relates to volume with a couple of points of price and new products also contributing.

Pete: And you heard us talk about some of the new specialty products in the call and we talked about visit Mel volumes tripling in the U S.

Speaker Change #208: Vimizim on.

Speaker Change #223: <unk> sales at this point are still very small so we're still talking a few million dollars, but as we see the uptake of the Alzheimer's therapies, we're seeing continued interest and implementation of programs to support diagnostics in this area. So we expect to see continued growth throughout the year I think the CMA.

Pete: Ruling could unlock accelerated growth next year, both in visit Mel flow Paradise, and some of the other products that we're working on Pete I don't know if you'd like to add to that.

Pete: I just think we haven't framed up what all the longer term growth yet will be on the molecules.

Pete: The the hospital might be paying a couple thousand dollars four but theyre getting reimbursed $200 for now and in the future they'll get reimbursed at what they're paying for it and so to be able to detail that and have a discussion with an institution about how to build out a program, that's actually going to be a value creator for them and our.

Pete: Confidence that the outcome capabilities for the patient is higher is very strong. So if you think about syriana for metastatic breast cancer.

Speaker Change #208: Actually on <unk>.

Speaker Change #219: Many of the guidance documents now, but its challenging economical for someone to actually implement it on a day to day process on tomorrow situation that changes.

Speaker Change #230: And the other aspect is probably even less about what we do on diagnostics and more about what the pharmaceutical companies are dealing with therapies and so the more therapies that come out in this space. The more you need someone like GE healthcare that has the equipment the data integration and distribution capabilities and the diagnostic molecules.

Speaker Change #230: To help solve the equation and so we will obviously spend more time on this with investors, but this is a very positive direction and it's quite helpful for our growth strategies in the coming years.

Speaker Change #227: Thanks, guys can I just ask one follow up too on China, I'm, just trying to square your comments with some of the competitors the peers and your approach to guidance. There I guess do you think that you're seeing.

Speaker Change #225: Seeing the same things that your competitors are talking about they're talking about orders starting to come back through the second half of the year and I'm just curious of your being more purposeful about being conservative with your China guidance.

Speaker Change #225: Just given the uncertainty there or do you think that you're aligned with how others are calling it.

Speaker Change #219: Sure.

Speaker Change #219: Sure So just to start and I'll turn it over to Pete <unk>.

Speaker Change #221: First half decline in sales 15%.

Pete: As we look at the market and.

Pete: Orders in the market and we're talking about market and tender activity versus anything share related.

Pete: We have a very locked up dynamic on an orders and into the fourth now could we be wrong to the upside we might be but as we look at it today. We felt it was prudent not to try to time the impact on the fourth quarter in terms of sales and we remove that I'm hopeful that we do better but at this.

Pete: Point, we think this was the right thing to do we'll watch the stimulus really carefully as we as we think about what the impact onto 2025 will be.

Pete: We have continued declines in a tough market forecast and again not in GE specific item. This is a broad based market view that we have.

Speaker Change #208: Great.

Speaker Change #208: I think Jay hit the point so.

Speaker Change #208: Again when this comes back for US. This is really largely related to timing of China's stimulus program. So we're not betting on the timing. We think we've got our base case lined out well, which is really tied to our installed base. What's our secured business that we have here coming through the second half and as I mentioned, we would expect to see.

Speaker Change #232: Some orders uptick later this year, but when we take a look at particularly the equipment. We have between time you win a tender get an order have the room ready and install it that ordered as sales piece would be very tight and hence why we just decided to take it out.

Pete: Thanks Pete.

Speaker Change #208: <unk>.

Speaker Change #208: Thank you. Our next question comes from the line of Graham Doyle with UBS.

Speaker Change #208: Good morning, Graham Good morning, guys.

Graham Doyle: Good morning, guys. Thanks for taking the question, it's again a follow up on China.

Graham Doyle: When will you be J economy called out the actual number it looks to me like there's kind of a like a 40% die in a Nash in hte versus your original assumption, which is obviously a very very large change.

Speaker Change #235: And it just makes me wonder what's the company's then you do hit your mid term targets. They started next year given high volatile that market is and to the point, Matt made I mean, I was with Siemens and Philips today and it does sound like they're not forecasting a decline of anywhere near that magnitude in second half in China. So.

Speaker Change #220: Is it generally just about more treatments or is there something happening in say.

Speaker Change #220: The patient monitoring market that may be viewed as oxy and be great to get that correct. Thank you Greg.

Speaker Change #229: It's starting to look for our business in China, and it's primarily an imaging ultrasound story all of us have different mixes of products. So theres not obviously, a one to one match, but I'll tell you what we did so what we've done is we have our sales force going out to all 31 of the provinces all of our big customers and <unk>.

Speaker Change #229: Actually asking the questions when you're going to buy what youre going to buy what that's going to look up and we kind of roll that all up for each 31 provenance and try to understand what they're saying what the timing would look like and then based on that understand how long. It takes a tender how long it takes to get the order how much time them to actually do it installed.

Speaker Change #229: <unk> on the mix and when we do that rollout, we do think theres going to be orders coming but we just don't think that there's enough time on the clock from a sales standpoint and to Jay's point, we might be wrong, but we're not in the business of trying to guess and we just thought it prudent to take out.

Speaker Change #229: Okay.

Speaker Change #224: Next question is why was it in there in the first place.

Speaker Change #228: At what point did you put.

Jay: The guidance at the site level that started this year with a fewer bigger.

Speaker Change #234: It didn't seem like something that was bad.

Speaker Change #241: So I'm just trying to figure eight's habitable.

Speaker Change #237: Have they gone.

Speaker Change #237: Yeah Barrett look very fair question and keep in mind and O. Two when the stimulus came within four to six months it ramped unbelievably quickly and.

Speaker Change #237: So I think as we started the year it wasn't super clear, what if there was going to be stimulus or not I think you may recall.

Speaker Change #234: But as we got closer to Q2 of the question is if it follows the same ramp it's going to probably be within within this year. What's new is the fact that when it is slower in someone's deciding to buy if you buy something now you may not get the 30 40, 50% value from the government.

Speaker Change #226: To actually support your sale.

Speaker Change #226: So naturally you're going to wait to kind of make a decision to see what stimulus is that's really the difference here in the calculation that.

Speaker Change #233: I don't think anybody saw that would take that much longer I mean, the only thing to add is.

Speaker Change #249: This is not even like so we're seeing a depressed level of demand relative to normal as people await clarity. We think the stimulus is a good positive thing long term, but in the market as it as we saw it in Q2 as we see Q3 quarter to date.

Speaker Change #233: It is depressing activity in the market, thus far and so that's why we made the assumption that we did.

Speaker Change #233: Okay.

Praful: It sounds like an air pocket. So the situation for this period and let's say praful. Thanks, a lot guys.

Praful: Okay. Thank you.

Speaker Change #254: Thank you so much. Our next question comes from the line of Patrick Wood with Morgan Stanley. Please proceed.

Patrick Wood: Brilliant. Thank you so much for taking the questions.

Patrick Wood: Apologize if I heard this wrong I thought you guys mentioned, the Q3 with something like plus one organic and so of.

Speaker Change #238: The implied Q4 step up qualitatively how much is a function of there's ultrasound launches relative to the strong U S imaging market.

Speaker Change #251: Apologies if I missed this earlier, but if you could just unpack the <unk> that would be really helpful.

Speaker Change #242: Sure a lot of this comes down to the strong order performance that we saw in the second quarter and when we book that for delivery in Q3 Q4 for the ex China business.

Speaker Change #239: Maybe taking a step back and talking about revenue confidence generally.

Patrick Wood: Patrick about 45% of our revenue is recurring revenue either in the form of services or pdx and I would say the volatility around these categories is reasonably low we have decent predictability now the remaining 55% is equipment and so.

Speaker Change #245: For us as we think about equipment one of the things we look at is the secured rate.

Speaker Change #245: Which is the equipment that we have in the backlog that scheduled for a given quarter.

Patrick Wood: Over the last four quarters, we've had around 75% of our revenue in this secured rate coming from the backlog with the other 25% sold and installed in the quarter right. So really 25% of the equipment is up for grabs in a given quarter. That's a phenomena again that we see.

Patrick Wood: Generally speaking in each of the quarters as we look at the second half of the year. We see this similar if not slightly better than the historic 70, 525 split going into the second half and so really what the Q4 step up Theres a normal step up from Q3 to Q4, but in specific as it relates to.

Patrick Wood: Why we have this high level of confidence it comes down to the backlog and when we're expecting those deliveries to take place.

Patrick Wood: Really that's that's the driver around the step up of course to your point, we're going to see continued performance on some of the new product launches. We're also expecting to see continued robust performance out of the U S market, but again the analytics that we have really supports this this Q4 step up which we feel good about.

Speaker Change #252: I think the other point you touch on a J as with some of the share gains we've had on some of the larger equipment a year ago. We are actually have now service contracts growth and we're expecting our service contract growth in the second half not just expecting we could see it it's already in the books.

Patrick Wood: Step up a few points in the second half and that has a higher margin and obviously.

Patrick Wood: It's already on the books.

Speaker Change #253: Yes, good point on the warranty role very one quick follow up it's been a few years since I ran the math that the U S installed base last time I tried to back it out I got the average age is something like seven years, so pretty old I don't know if you have any instinct on how that number kind of hit series.

Speaker Change #261: Yes, I think it obviously varies quite a bit by modality. It varies by company to based on.

Speaker Change #247: If you're taking a look at your own installed base or the overall I think in average, it's a little bit older than that.

Speaker Change #244: We have some modalities, particularly in MLR, where it's probably even a few years older than that and so that's really boding well right now for us doing upgrades and stuff on conversion, but we believe when we take a look at all of ours plus the install base. There is actually a reasonable amount of Av replacement cycle.

Speaker Change #244: <unk> because of the age.

Brian: Brian Thank you.

Brian: Thank you.

Speaker Change #240: And our last question is coming from the line of Suraj Kalia with Oppenheimer <unk> Company. Please proceed.

Suraj Kalia: Good morning, Peter J can you hear me all right.

Peter J. Arduini: We can good morning.

Praful: So.

Suraj Kalia: Thank you for taking my questions and Peter I'll throw both of them you guys. This way and both of these questions are designed really for assessing the differential impact.

Suraj Kalia: So first on China, Peter I wanted to piggyback with David's question from earlier.

Speaker Change #263: Your competitors are talking about value partnerships local for local and maybe set the stage.

Speaker Change #236: When China opens up.

Speaker Change #236: <unk>.

Speaker Change #264: The rising tide lift everyone equally or do you think there will be a differential impact and part of me is also thinking how is the book to build specifically within China looking for different people.

Speaker Change #236: And how should we think about when China opens up what is the differential impact.

Speaker Change #236: Peter That's one question and I'll throw the second one also quickly.

Speaker Change #248: Your weight reading pharmaceuticals again.

Speaker Change #247: <unk> are talking about pharmacy networks that give them an edge in radiopharmaceuticals.

Speaker Change #250: US understand GE is buffers for for growth in this segment, especially given what Medicare is doing thank you for taking my questions.

Speaker Change #257: Sure I would say look on China, I don't know if I have any better crystal ball than anyone else I think we are making the assumption that.

Speaker Change #250: A rising China will benefit everyone at some level. Obviously, there is a lot of local competition. There's multinational players I think everybody will play at a different point.

Speaker Change #255: We've been manufacturing for over 35 years, we source locally for the in China market and so we believe we can compete just like a local company and we're very focused on as you move into the non coastal cities into the west areas that you need to actually be even more.

J: More of a value based product and capabilities and so theres two sides of this very high end and also value and I think we've got the type of lineup that we can be competitive there, but I don't think I have any better insight relative to two two that on how China will play out J I don't know if you want to add any comments there sure I mean, I think I won't rule.

Speaker Change #243: Watch it over time, but we feel very good about the share position that we've been able to protect over time and a lot of that comes down to the.

J: The manufacturing that we do in China for China, a large teams that we have on the ground that Pete described so from a share standpoint, we've been we've been fairly effective thus far and so as we look at the next stimulus. We have all reasons to believe we'll be able to participate in that market going forward and we're designing plans too.

J: To execute on that.

Speaker Change #260: So so if you switch to your question relative to kind of Radiopharmaceuticals and look our will spend again, a more time on this at our Investor day, but again, if you think about what makes us unique everything from our cyclotron.

Speaker Change #260: And capabilities or onsite generation of your own isotopes at an institution, where one of the very few companies that kind of has that as well as the path technology at <unk>, Cte Pat Emaar and actually in the spec camera world becomes Super important a multi had 10 plus had system.

Speaker Change #258: It allows you to do some of these oncology staging drive and again, if you don't have that see that part of the exam could be an hour and a half where on our system. That's 15 minutes. So there's phases of that.

Speaker Change #258: Network, we do have a distribution structure. There are some other players that have a much larger distribution structure I would argue with the CMS changed the real value here is and if you can distribute it is do you actually make it and so we actually make these molecules that.

Speaker Change #258: In some way is going to be transformational relative to diagnosis of certain diseases and you could argue they'd been handicapped because they haven't been given their fair share of reimbursement for the value. They create it's a preliminary roll we believe that's going to come into effect on January 1st if it does.

Speaker Change #258: We do think that youre going to definitely see significantly more growth on these molecules than we had estimated they would being treated as a supply so more to come and obviously that gives us more energy to say this is a space to invest and obviously continue to build out on thanks for your question.

Speaker Change #258: Okay.

Speaker Change #259: Thank you and this concludes the Q&A session. Please proceed with any closing remarks.

Speaker Change #265: Thank you everyone for joining us today, and we look forward to connecting with you in the coming days at one of our conferences in the next few months as a reminder, we'll host our Investor day in New York on November 20, <unk>. Thanks, so much for listening.

Speaker Change #262: And thank you all who participated in today's conference and you may now disconnect.

Q2 2024 GE HealthCare Technologies Inc Earnings Call

Request a DemoDemo

GEHC

GE HealthCare

Earnings