Q3 2025 GE HealthCare Technologies Inc Earnings Call
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It's my pleasure to turn the call over to the Investor Relations Officer Caroline borders. Please proceed.
Thanks, operator, good morning, and welcome to the G E Health Care's third quarter 2025 earnings call I'm joined by our President and CEO, Peter Arduini, and Vice President and CFO, Jay Sicario. Our conference call remarks will include both GAAP and non-GAAP financial results.
<unk> 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 as described in our SEC filings actual results may differ materially due to risks and uncertainties.
That I'll hand, the call over to Peter.
Thanks, Carolyn good morning, and thank you for joining US today, we delivered another quarter of solid results and we're focused on executing our precision care strategy and the <unk>.
Third quarter organic revenue grew 4%, we delivered robust orders growth of 6% with growth across all segments.
Reflect solid customer demand for our innovative solutions are healthy capital equipment environment, and our strong commercial execution.
We're now entering a new wave of innovation as a result of our increased R&D investments over the past few years.
When you couple this with our focus on lean, we expect to accelerate future top and bottom line growth.
Solid backlog demonstrates that our customers are investing in our new products and solutions. For instance, we are seeing robust growth in contrast media and nuclear medicine.
Where we are uniquely positioned to deliver end to end solutions for our customers our synergistic portfolio of diagnostic imaging equipment, Radiopharmaceuticals AI cloud and software helped drive efficiencies for our customers and creates a competitive advantage for the company.
Looking at commercial execution, we continue to see momentum across our business as we secured multiple large system deals in the quarter totaling nearly a half a billion dollars in future revenue.
Earlier this month, we announced a 14 year Caroline's with UC, San Diego Health focused on early detection in advancing cancer care with imaging solutions and novel therapies, such as <unk>.
Collaborations like these exemplify our ability to leverage our broad portfolio and service capabilities to deepen relationships with customers, creating predictable revenue streams.
To support this we've strategically invested in capabilities that accelerate growth and expand margins, while enhancing operational efficiency across the healthcare ecosystem.
In addition to organic investment our disciplined capital allocation approach has strengthened our portfolio. For example, our planned acquisition of Isometrics includes digital tools to help clinicians to detect and quantify potential high risk side effects in patients undergoing Alzheimer's therapies.
Peter Arduini: Imaging solutions and novel therapies such as Theranostics. Collaborations like these exemplify our ability to leverage our broad portfolio and service capabilities to deepen relationships with customers, creating predictable revenue streams. To support this, we've strategically invested in capabilities that accelerate growth and expand margins while enhancing operational efficiency across the healthcare ecosystem. In addition to organic investment, our disciplined capital allocation approach has strengthened our portfolio. For example, our planned acquisition of icometrix includes digital tools to help clinicians detect and quantify potential high risk side effects in patients undergoing Alzheimer's therapies. Global approvals of these therapies are increasing and demand for more frequent MRI exams and our PET amyloid agent Visumel are also growing. With the integration of icometrix technologies into our MR systems, we will strengthen our unique and comprehensive portfolio to support the full Alzheimer's care pathway.
Global approvals of these therapies are increasing and demand for more frequent MRI exams, and our pet amyloid agent visible are also growing with.
With the integration of icon metrics technologies into our EMR systems, we will strengthen our unique and comprehensive portfolio to support the full Alzheimer's care pathway.
This is a great example of our <unk> strategy at work smart devices in imaging and drugs in pdx enabled by AI to create meaningful value for our customers and patients while driving sustainable growth for the company.
As we continue to navigate a dynamic global environment, our teams remain agile and focused on operational improvements and actions to reduce tariff impact.
Mitigated approximately 50% of our 2025 gross exposure and we're on track with our goal of delivering a lower net tariff impact in 2026 versus 2025 based on currently enacted tariffs.
Peter Arduini: This is a great example of our D3 strategy at work. Smart devices and imaging and drugs and PDx enabled by AI to create meaningful value for our customers and patients while driving sustainable growth for the company. As we continue to navigate a dynamic global environment, our teams remain agile and focused on operational improvements and actions to reduce tariff impacts. We've mitigated approximately 50% of our 2025 gross exposure and we're on track with our goal of delivering a lower net tariff impact in 2026 versus 2025 based on currently enacted tariffs. As a result of our strong performance year to date and the healthy capital environment trends we're observing, we're pleased to raise our adjusted EPS guidance, which Jay will expand on later in the call. Above all, we're intensely focused on delivering for our customers and shareholders. With that, I'll hand the call over to Jay.
As a result of our strong performance year to date.
And the healthy capital environment trends, we're observing we are pleased to raise our adjusted EPS guidance, which Jay will expand on later in the call above all we're intensely focused on delivering for our customers and shareholders with that I'll hand, the call over to J J.
Thanks, Pete let's start with our financial performance on Slide four we're pleased with our solid operational performance across the business in the quarter.
Revenues of $5 1 billion increased 4% year over year organically ahead of our expectations.
Revenue growth was driven by strength in our imaging.
And pdx businesses.
We saw particular strength across EMEA and the U S.
Jay Saccaro: Thanks Pete. Let's start with our financial performance on Slide 4. We're pleased with our solid operational performance across the business in the quarter. Revenues of $5.1 billion increased 4% year over year, organically ahead of our expectations. Revenue growth was driven by strength in our Imaging, AVS, and Pharmaceutical Diagnostics (PDx) businesses. We saw particular strength across EMEA and the U.S. On a reported basis, service revenue was strong, growing 6% year over year, driven by new and existing customer agreements. Product revenue was up 5% year over year, reflecting healthy customer demand and procedure volumes. We delivered robust organic orders growth in the quarter, up 6% year over year on a trailing four quarter average. Orders growth was also up 6%. We delivered strong book-to-bill at 1.06 times, and we exited the quarter with a solid backlog at $21.2 billion.
On a reported basis service revenue was strong growing 6% year over year, driven by new and existing customer agreements.
As we continue to navigate a dynamic global environment, our teams remain agile and focused on operational improvements and actions to reduce tariff impact, we've mitigated approximately, 50% of our 2025 gross exposure. And we're on track with our goal of delivering a lower net, tariff impact in 2026 versus 2025. Based on currently enacted tariffs as a result of our strong performance year to date and the healthy Capital environment Trends were observing. We're pleased to raise our adjusted EPS guidance, which Jay will expand on later in the call above. All, we're intensely focused on delivering for our customers and shareholders with that. I'll hand the call over to Jay Jay.
Thanks Pete. Let's start with our financial performance on slide 4.
Product revenue was up 5% year over year, reflecting healthy customer demand and procedure volumes.
We delivered robust organic orders growth in the quarter up 6% year over year on a trailing four quarter average orders growth was also up 6%.
We're pleased with our solid operational performance. Across the business, in the quarter, revenues of $5.1 billion increased 4% year-over-year, organically ahead of our expectations.
Revenue growth was driven by strength in our Imaging abs and PDX businesses.
We delivered strong book to Bill at one six times and we exited the quarter with a solid backlog at $21 2 billion.
We we saw particular strengths across EMA and the US.
Taken together, we believe these metrics as well as our success with multi year enterprise deals and high margin innovations are good indicators of future growth.
On a reported basis, service revenue was strong, growing 6% year-over-year, driven by new and existing customer agreements.
Product Revenue was up 5% year-over-year reflecting, healthy customer demand and procedure volumes.
Adjusted EBIT margin was 14, 8% down 150 basis points year over year.
We delivered robust organic orders growth in the quarter.
Up 6% year-over-year.
We delivered adjusted EPS of $1 <unk> per share down 6% year over year.
On a trailing four-quarter average, orders growth was also up 6%.
This included approximately 16.
The tariff impact.
Excluding this impact <unk>.
Jay Saccaro: Taken together, we believe these metrics, as well as our success with multi-year enterprise deals and high margin innovations, are good indicators of future growth. Adjusted EBIT margin was 14.8%, down 150 basis points year over year. We delivered adjusted EPS of $1.07 per share, down 6% year over year. This included approximately $0.16 of tariff impact. Excluding this impact, adjusted EPS would have been up in the high single digits year over year. Lastly, our free cash flow was $483 million in the quarter. Looking closer at margin performance in the third quarter on Slide 5, adjusted EBIT margin of 14.8% was down due to the impact of tariffs, which was approximately $95 million and was partially offset by favorable volume and pricing. Excluding the tariff impact of 180 basis points, adjusted EBIT margin would have expanded approximately 30 basis points.
We delivered a strong book-to-bill ratio of 1.06 times, and we exited the quarter with a solid backlog of $21.2 billion.
And EPS would have been up in the high single digits year over year Lastly, our free cash flow was $483 million in the quarter.
Looking closer at margin performance in the third quarter on slide five adjusted EBIT margin of 14, 8% was down due to the impact of tariffs, which was approximately $95 million and was partially offset by favorable volume and pricing.
Taken together, we believe these metrics as well as our success with multi-year, Enterprise deals and high margin Innovations are good indicators of future growth.
Adjusted EBIT margin was 14.8%, down 150 basis points year-over-year.
We delivered a just an EPS of $17 per share down 6% year-over-year.
Excluding the tariff impact of 180 basis points adjusted EBIT margin would have expanded approximately 30 basis points.
From 16 cents of tariff impact.
Adjusted gross margin declined 300 basis points year over year, primarily due to tariff impact on investments strong volume growth and sustained pricing momentum have helped to partially offset broader macroeconomic margin pressures.
Excluding this impact adjusted EPS would have been up in the high single digits year-over-year. Lastly, our free cash flow was 483 million in the quarter.
Related to investments similar to last quarter, we had certain cost move from R&D to cost of goods sold as products move closer to commercialization, including in MLR and Pat.
Looking closer at margin performance in the third quarter on slide 5, adjusted ebit margin of 14.8% was down due to the impact of tariffs, which was approximately 95 million and was partially offset by favorable volume and pricing.
Without this shift R&D expense would be up year over year, reflecting our continued commitment to innovation investment.
Jay Saccaro: Adjusted gross margin declined 300 basis points year over year, primarily due to tariff impact and investments. Strong volume growth and sustained pricing momentum have helped to partially offset broader macroeconomic margin pressures related to investments. Similar to last quarter, we had certain costs move from R&D to cost of goods sold as products move closer to commercialization, including in MR and PET. Without this shift, R&D expense would be up year over year, reflecting our continued commitment to innovation investment. We have a number of strategic programs underway to drive operational margin expansion. These include sourcing from lower cost regions, developing second sources, implementing value engineering initiatives, executing targeted site transfers, and achieving price increases. These efforts are not only designed to improve our margin but also strategically reduce our exposure to high tariff trade flows, further strengthening our global supply chain resilience and margin profile.
Excluding the Tariff impact of 180 basis points, adjusted even margin would have expanded approximately 30 basis points.
We have a number of strategic programs underway to drive operational margin expansion.
Adjusted gross margin declined 300 basis points year-over-year, primarily due to tariff impacts and investments.
These include sourcing from lower cost regions developing second sources implementing value engineering initiatives executing targeted site transfers in achieving price increases. These efforts are not only designed to improve our margin, but also strategically reduce our exposure to high tariff trade flows firm.
Strong volume growth and sustained pricing, momentum have helped to partially offset broader macroeconomic margin pressures.
And similar to last quarter we had certain costs move from R&D to cost of goods sold as products move closer to commercialization including in Mr. And Pat
Other strengthening our global supply chain resilience and margin profile.
Together these initiatives contributed to the 30 basis points of adjusted EBIT margin improvement, excluding the impact of tariffs and we mitigated nearly half of the gross tariff impact.
Without this shift, R&D expense would be up year-over-year, reflecting our continued commitment to innovation investment.
We have a number of strategic programs underway to drive operational margin expansion.
We're also driving greater efficiency in SG&A, while making targeted investments in commercial capabilities, such as with floor Corrado to strengthen our go to market approach and support long term growth.
These actions reflect our commitment to margin expansion and delivering sustainable value.
Jay Saccaro: Taken together, these initiatives contributed to the 30 basis points of adjusted EBIT margin improvement excluding the impact of tariffs, and we mitigated nearly half of the gross tariff impact. We're also driving greater efficiency in SGA while making targeted investments in commercial capabilities such as with Florcato to strengthen our go to market approach and support long term growth. These actions reflect our commitment to margin expansion and delivering sustainable value. Moving to segment performance, starting with Imaging on Slide 6, organic revenue in the quarter was up 4% versus the prior year driven by strong commercial execution in EMEA and the U.S. as imaging equipment remains a top investment priority for customers. Segment EBIT margin declined 260 basis points year over year and was largely driven by tariff pressures. We're pleased that sequentially both Imaging revenue and margin increased.
These include sourcing from lower cost regions developing second sources, implementing value. Engineering initiatives, executing targeted site transfers and achieving price increases. These efforts are not only designed to improve our margin, but also strategically reduce our exposure to high tariff trade flows further. Strengthening our Global Supply Chain, resilience and margin profile.
Moving to segment performance, starting with imaging on slide six organic <unk> revenue in the quarter was up 4% versus the prior year driven by strong commercial execution in EMEA and the U S. As imaging equipment remains a top investment priority for customers.
Taken together. These initiatives contributed to the 30 basis points of adjusted ebit margin Improvement, excluding the impact of tariffs and we mitigated nearly half of the growth. Sheriff impact,
Segment, EBIT margin declined 260 basis points year over year, largely driven by tariff pressures. We're pleased that sequentially. Both imaging revenue and margin increased we're focused on disciplined price management as well as operational efficiency and platforming improvements.
we're also driving greater efficiency in sgna while making targeted investments in commercial capabilities, such as with Fado, to strengthen our, go to market approach and support long-term growth,
These actions reflect our commitment to margin expansion and delivering sustainable value.
Overall, we saw robust growth in the U S. As customers continue to upgrade an aging installed base in areas, such as radiology and cardiology.
Turning to advanced visualization solutions on slide seven organic revenue was up 6% year over year with strong performance in the U S and demand for new products.
Moving to segment performance starting with Imaging on slide 6 organic and revenue in the quarter was up 4% versus the prior year driven by strong commercial execution in Amia and the us as Imaging equipment remains a top investment priority for customers.
Segment, EBIT margin increased by 180 basis points year over year, driven by volume growth and cost productivity.
Jay Saccaro: We're focused on disciplined price management as well as operational efficiency and platforming improvements. Overall, we saw robust growth in the U.S. as customers continue to upgrade an aging installed base in areas such as radiology and cardiology. Turning to Advanced Visualization Solutions on Slide 7, organic revenue was up 6% year over year with strong performance in the U.S. and demand for new products. Segment EBIT margin increased by 180 basis points year over year driven by volume growth and cost productivity. We had strong execution in new products and commercial investments that are delivering faster growth and higher margins. This was the fourth consecutive quarter of year over year sales and margin growth for AVS. Our pipeline continues to focus on growing many clinical areas including our cardiovascular ultrasound market leadership.
Segments ebit margin declined, 260 basis points. Year-over-year largely D driven by tariff pressures. We're pleased that sequentially, both Imaging revenue and margin increased.
We had strong execution and new products and commercial investments that are delivering faster growth and higher margins. This was the fourth consecutive quarter of year over year sales and margin growth for a b S.
We're focused on disciplined price management, as well as operational efficiency and platform improvements.
Overall, we saw robust growth in the U.S. as customers continue to upgrade an aging installed base in areas such as radiology and cardiology.
Our pipeline continues to focus on growing many clinical areas, including our cardiovascular ultrasound market leadership.
turning to Advanced visualization Solutions on slide 7. Organic revenue is up 6% year-over-year with strong performance in the US and demand for new products.
Examples of this include our most recent vivid pioneer launch, which has been well received by customers and other key products for radiology and cardiology interventional procedures.
Segment EBIT margin increased by 180 basis points year-over-year, driven by volume growth and cost productivity.
In addition, AI enabled products launched earlier in the year are contributing significantly to our revenue growth and margin expansion.
We had strong execution in new products and Commercial Investments that are delivering faster growth and higher margins. This was the fourth consecutive quarter of year-over-year sales and margin growth for a BS.
Turning to patient care solutions on slide eight orders growth in the third quarter was healthy however, organic revenue was down 7% versus the prior year, primarily due to a product hold.
Jay Saccaro: Examples of this include our most recent Vivid Pioneer launch, which has been well received by customers, and other key products for radiology and cardiology interventional procedures. In addition, AI-enabled products launched earlier in the year are contributing significantly to our revenue growth and margin expansion. Turning to Patient Care Solutions on Slide 8, orders growth in the third quarter was healthy. However, organic revenue was down 7% versus the prior year, primarily due to a product holding. This hold has now been resolved and shipments for the impacted product have resumed, positioning us for a sequential sales step up in the fourth quarter. Segment EBIT margin declined by 680 basis points year over year, primarily driven by the product hold, unfavorable product mix, and tariffs. With expected volume improvements and continued productivity actions, we anticipate a meaningful sequential improvement in EBIT margin in the fourth quarter.
Our pipeline continues to focus on growing, many clinical areas, including our cardiovascular ultrasound Market leadership.
This hold has now been resolved and shipments for the impacted products have resumed positioning us for a sequential sales step up in the fourth quarter.
Examples of this include our most recent Vivid Pioneer launch which has been well received by customers and other key products for radiology and Cardiology Interventional procedures.
Segment EBIT margin declined by 680 basis points year over year, primarily driven by the product hold unfavorable product mix and tariffs with expected volume improvements and continued productivity actions, we anticipate a meaningful sequential improvement in EBIT margin in the fourth.
In addition, AI enabled products launched earlier in the year are contributing significantly to our Revenue growth and margin expansion.
Turning to Patient Care Solutions on, slide 8, orders growth in the third quarter was healthy.
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Earlier this year, we brought Jeanette bank us on as our Pts leader and we're seeing progress around her efforts with the goal to improve growth and margin performance. She is working to drive commercial execution for recent product launches and setting the business up for sustainable growth.
However, organic Revenue was down 7% versus the prior year primarily due to a product hold.
This hold has now been resolved and shipments for the impacted product have resumed positioning us. For our sequential sales, step up in the fourth quarter.
She brings a new perspective and her top priorities are accelerating growth driving variable cost productivity and optimizing our cost structure. We're confident these actions will yield meaningful results.
Jay Saccaro: Earlier this year, we brought Jeannette Bankus on as our Patient Care Solutions leader, and we're seeing progress around her efforts with the goal to improve growth and margin performance. She's working to drive commercial execution for recent product launches and setting the business up for sustainable growth. She brings a new perspective, and her top priorities are accelerating growth, driving variable cost productivity, and optimizing our cost structure. We're confident these actions will yield meaningful results. We're also excited about new product launches and AI-driven software solutions in Patient Care Solutions. These build on our clinical capabilities and are expected to drive faster growth and higher margins. Moving to Pharmaceutical Diagnostics on Slide 9, we delivered a strong quarter with sales growing 10% organically year over year.
Segment, even margin declined by 680 basis points year-over-year, primarily driven by the product, hold unfavorable product, mix and tariffs with expected volume improvements, and continued productivity actions. We anticipate a meaningful sequential Improvement in ebit margin in the fourth quarter.
We're also excited about new product launches and AI, driven software solutions and PCF.
These build on our clinical capabilities and are expected to drive faster growth and higher margins.
Moving to pharmaceutical diagnostics on slide nine we delivered a strong quarter with sales growing 10% organically year over year. This was driven by solid performance in our contrast media and radiopharmaceutical portfolios, both of which contribute to our growing recurring revenue profile.
Earlier this year, we brought Janette bankus on as our PCS leader and we're seeing progress around her efforts with the goal to improve, growth and margin performance. She's working to drive commercial execution for recent product, launches and setting the business up for sustainable growth.
She brings A New Perspective and her top priorities are accelerating growth. Driving variable cost productivity and optimizing our cost structure. We're confident, these actions will yield meaningful results.
EBIT grew 14% while margins declined 150 basis points year over year due to planned investments in NPI, such as floor condo as well as the Nihon metaphysics acquisition.
We're also excited about new product launches and AI driven software Solutions in PCs.
Capabilities and are expected to drive faster growth and higher margins.
We're very encouraged by the growth in our U S radio pharmaceuticals business and in our molecular imaging equipment.
Jay Saccaro: This was driven by solid performance in our contrast media and radiopharmaceutical portfolios, both of which contribute to our growing recurring revenue profile. EBIT grew 14% while margins declined 150 basis points year over year due to planned investments in NPIs such as Florcato as well as the Nihon Metaphysics acquisition. We're very encouraged by the growth in our U.S. radiopharmaceuticals business and in our molecular imaging equipment. Imaging and PDx work in concert, and when enabled by AI and services, we're uniquely positioned to bring value in new ways for our customers. Let's look at cash performance on Slide 10. We delivered free cash flow of $483 million with a 99% free cash flow conversion. This was down $168 million year over year, primarily due to higher receivables attributable to revenue growth as well as higher tariff payments of approximately $95 million.
Imaging in Pdx working concert enabled by AI and services, we are uniquely positioned to bring value in new ways for our customers.
Let's look at cash performance on slide 10, we delivered free cash flow of $483 million with a 99% free cash flow conversion.
Moving to pharmaceutical Diagnostics on slide 9, we delivered a strong quarter with sales growing 10%, organically year-over-year. This was driven by solid performance in our contrast media and radio pharmaceutical portfolios both of which contribute to our growing recurring Revenue profile.
This was down $168 million year over year, primarily due to higher receivables attributable revenue growth as well as higher tariff payments of approximately $95 million.
EV growth was 14%, while margins declined by 150 basis points year-over-year due to planned investments in NPI, such as Florida, as well as the Nihon Metaphysics acquisition.
As it relates to our capital allocation strategy, our priority is to drive organic growth, while evaluating a rich M&A pipeline focused on tuck in opportunities. We will maintain a disciplined approach that aligns with the key metrics, we have discussed in the past.
We're very encouraged by the growth in our U.S. Radio Pharmaceuticals business and in our Molecular Imaging, Equipment Imaging, and PDX working in concert. And when it is enabled by AI and services, we're uniquely positioned to bring value in new ways for our customers.
During the third quarter, we repurchased approximately $100 million of our shares reflecting our confidence in our growth prospects.
Let's look at cash. Performance on slide 10. We delivered free cash flow of $483 million with a 99% free cash flow conversion.
Our strong balance sheet, coupled with an attractive leverage profile positions us well to execute on our capital allocation strategy.
Jay Saccaro: As it relates to our capital allocation strategy, our priority is to drive organic growth while evaluating a rich M&A pipeline focused on tuck-in opportunities. We'll maintain a disciplined approach that aligns with the key metrics we've discussed in the past. During the third quarter, we repurchased approximately $100 million of our shares, reflecting our confidence in our growth prospects. Our strong balance sheet, coupled with an attractive leverage profile, positions us well to execute on our capital allocation strategy. Now let's turn to our outlook on slide 11. Given the strong performance year to date and healthy capital investment trends, we're updating our guidance for full year 2025. We continue to expect full year organic revenue growth of approximately 3%. Based on where our rates are today, we expect FX to be a 50 basis point tailwind to revenue.
This was down 168 million year-over-year primarily due to higher receivables attributable to the revenue growth, as well as higher tariff payments of approximately 95 million.
Now, let's turn to our outlook on slide 11, given our strong performance year to date and healthy capital investment trends, we're updating our guidance for full year 2025, we continue to expect full year organic revenue growth of approximately 3%.
As it relates to our Capital allocation strategy, our priority is to drive organic growth while evaluating a rich m&a pipeline focused on tucking opportunities. We'll maintain a disciplined approach that aligns with the key metrics. We've discussed in the past.
Just on where rates are today, we expect FX to be a 50 basis point tailwind to revenue.
During the third quarter, we repurchased approximately a hundred million dollars of our shares reflecting our confidence in our growth prospects.
Adjusted EBIT margin for the full year is unchanged in the range of 15, two to 15, 4%.
We remain focused on innovation productivity and G&A optimization to drive long term margin expansion.
Our strong balance sheet, coupled with an attractive leverage profile, positions us well to execute on our capital allocation strategy.
We expect our adjusted effective tax rate to be in the range of 20% to 21% for the full year.
Now let's turn to our outlook on slide 11, given the strong performance, year-to-date and healthy capital investment Trends. We're updating our guidance for a full year 2025
For adjusted EPS, we're raising the lower end of our guidance range and now expect to deliver between $4 51, and $4 63 per.
We continue to expect full year organic Revenue growth of approximately 3%.
Jay Saccaro: Adjusted EBIT margin for the full year is unchanged in the range of 15.2% to 15.4%. We remain focused on innovation, productivity, and G&A optimization to drive long-term margin expansion. We expect our adjusted effective tax rate to be in the range of 20% to 21% for the full year. For adjusted EPS, we're raising the lower end of our guidance range and now expect to deliver between $4.51 and $4.63 per share for the full year. Based on the current environment, we continue to expect tariffs in 2025 to impact adjusted EPS by approximately $0.45 for the year. Finally, we expect to deliver free cash flow of at least $1.4 billion for the full year, which includes the tariff payments. With that, I'll turn the call over to Pete. Pete, thanks Jay.
Based on where our rates are today, we expect FX to be a 50 basis, point Tailwind to revenue.
Per share for the full year.
Based on the current environment, we continue to expect tariffs in 2025% to impact adjusted EPS by approximately <unk> 45.
Adjusted ebit margin for the full year, is unchanged in the range of 152 to 15.4%.
For the year.
We remain focused on Innovation productivity and GNA optimizations. Drive long-term margin expansion.
Finally, we expect to deliver free cash flow of at least $1 4 billion for the full year, which includes the tariff payments.
We expect our adjusted effective tax rate to be in the range of 20 to 21% to the full year.
With that I'll turn the call over to Pete.
Pete.
Thanks, Jay turning to innovation, we've invested more than $3 billion in R&D since 2022 to deliver differentiated products and solutions that exceed customer expectations.
For adjusted EPS, we're raising the lower end of our guidance range and now expect to deliver between 4 and 51 cents and 4.63 cents per share for the full year.
Our R&D and go to market execution is enabling accelerated growth and margin improvement.
Based on the current environment we continue to expect tariffs in 2025 to impact adjusted EPS by approximately 45 cents for the year.
A great example of this is an ABS.
In 2024, we launched AI powered systems across the entire segment we've.
<unk> had strong customer adoption for these products for example in image guided solutions, we redesigned our interventional cardiology system alia with a more powerful to reduce footprint and onboard AI capabilities.
Finally, we expect to deliver free cash flow of at least 1.4 billion for the full year, which includes the Tariff payments.
With that, I'll turn the call over to Pete.
Peter Arduini: Turning to innovation, we've invested more than $3 billion in R&D since 2022 to deliver differentiated products and solutions that exceed customer expectations. Our R&D and go-to-market execution is enabling accelerated growth and margin improvement. A great example of this is in AVS. In 2024, we launched AI-powered systems across the entire segment. We've had strong customer adoption for these products. For example, in Image Guided Solutions, we redesigned our interventional cardiology system Allia IGS Pulse with a more powerful tube, reduced footprint, and onboard AI capabilities. It's ideal for ambulatory surgical centers and office-based labs, allowing us to partner with customers and win new deals in a rapidly growing ASC setting. In addition, our ultrasound portfolio underwent a complete refresh.
Pete.
<unk> is ideal for ambulatory surgical centers and office based labs, allowing us to partner with customers and win new deals and a rapidly growing ASC settings.
Thanks Jay, turning to Innovation. We've invested more than 3 billion dollars in R&D since 2022 to deliver differentiated products and solutions that exceed customer expectations.
Our R&D and go to market, execution is enabling accelerated growth and margin Improvement.
In addition, our ultrasound portfolio underwent a complete refresh we integrated advanced technology like caption AI and are upgrading our entire fleet of our clinical sub systems.
A great example of this is an ABS.
In 2024, we launched AI powered systems across the entire segment.
Into common platforms, which is increase the margins of these new products compared to prior models. All of these are driving revenue growth and margin accretion now and we expect that to continue in 2026 and beyond.
We've had strong customer adoption for these products. For example, in our image-guided solutions, we redesigned our Interventional Cardiology system, Aaliyah, with a more powerful tube, reduced footprint, and onboard AI capabilities.
Moving to the Middle row on the chart, where we feature several products that are commercially available in 2025 and Tcs. We're excited about three new products a completely refreshed anesthesia delivery system are monitoring platform that allows us to compete in new ways outside the U S and <unk>.
It's ideal for ambulatory, surgical centers in office space Labs, allowing us to partner with customers and win new deals, in a rapidly growing ASC setting.
Peter Arduini: We integrated advanced technology like Caption AI and are upgrading our entire fleet of our clinical subsystems into common platforms, which has increased the margins of these new products compared to prior models. All of these are driving revenue growth and margin accretion now, and we expect that to continue in 2026 and beyond. Moving to the middle row on the chart where we feature several products that are commercially available in 2025 and PCs, we're excited about three new products: a completely refreshed anesthesia delivery system, a monitoring platform that allows us to compete in new ways outside the U.S., and CareIntellect for Perinatal, a SaaS offering designed with clinicians to provide real-time insights in labor and delivery. It's the first of many clinical and operational applications that we expect to deliver faster growth, higher margins, and recurring revenue for PCs.
For perinatal SaaS offering designed with clinicians to provide real time insights and labor and delivery. It's the first of many clinical and operational applications that we expect to deliver faster growth higher margins and recurring revenue for Tcs.
In addition, our ultrasound portfolio, underwent a complete. Refresh we integrated advanced technology like caption Ai and our upgrading our entire fleet of our clinical subsystems into common platforms which is increased, the margins of these new products compared to Prior models. All of these are driving Revenue growth and margin accretion now and we expect that to continue in 2026 and Beyond
Feedback on for condo is strong with exceptional image quality half life benefits healthy reimbursement and new global guidelines to increase clinical confidence.
As a result, our prospect list is expanding and we're going slow to go fast so that customers get the best experience as this pharmaceutical has many years of strong growth opportunity in front of me.
A completely refreshed anesthesia delivery system. A monitoring platform that allows us to compete in new ways outside the US and Care. Intellect for perinatal a SAS offering designed with clinicians to provide real-time insights, and labor and delivery.
In September we signed an agreement to distribute for Kadow through CDL and outpatient cardiology leader accounting for about one third of the current U S pet procedures are.
Peter Arduini: Feedback on Florcato is strong with exceptional image quality, half-life benefits, healthy reimbursement, and new global guidelines to increase clinical confidence. As a result, our prospect list is expanding, and we're going slow to go fast so that customers get the best experience as this pharmaceutical has many years of strong growth opportunity in front of it. In September, we signed an agreement to distribute Florcato through CDL, an outpatient cardiology leader accounting for about one third of the current U.S. PET procedures. Our commercial and clinical teams are working closely with their CDL counterparts to begin transitioning their customer volume in the coming quarters. We're also encouraged by the strong backlog of new PET systems that will support imaging tracer growth in imaging. It's great to see the pipeline coming together after four years of investment.
It's the first of many clinical and operational applications that we expect to deliver faster growth, higher margins, and recurring revenue for PCs.
Our commercial and clinical teams are working closely with their CDL counterparts to begin transitioning their customer volume in the coming quarters.
Feedback on forcado is strong with exceptional image quality. Half-Life benefits, healthy reimbursement, and new Global guidelines to increase clinical confidence.
We're also encouraged by the strong backlog of new pet systems that will support imaging tracer growth.
In imaging, it's great to see the pipeline coming together after four years of investment the.
As a result, our Prospect list is expanding and we're going slow to go fast. So that customers get the best experience as this pharmaceutical has many years of strong growth opportunity in front of them.
The new products will bring unique capabilities to the market and be key enablers for our sales teams to drive faster growth and higher margins in the imaging portfolio.
We're entering a new wave of innovation across the enterprise and these are some of our boldest ideas yet.
In September, we signed an agreement to distribute forcado through CDL. An outpatient Cardiology leader accounting for about 1/3 of the current US pet procedures.
We're confident that we have the right innovations across all of our segments, a strong commercial strategy and a clear path to accelerate revenue growth from these new products over the medium term.
Our commercial and clinical teams are working closely with their CDL counterparts to begin transitioning. Their customer volume in the coming quarters.
We're also encouraged by the strong backlog of new pet systems that will support Imaging Tracer growth.
In summary, we feel good about our third quarter performance and the disciplined execution that has helped us effectively navigate a dynamic environment.
Peter Arduini: The new products will bring unique capabilities to the market and be key enablers for our sales teams to drive faster growth and higher margins in the imaging portfolio. We're entering a new wave of innovation across the enterprise, and these are some of our boldest ideas yet. We're confident that we have the right innovations across all of our segments, a strong commercial strategy, and a clear path to accelerate revenue growth from these new products over the medium term. In summary, we feel good about our third quarter performance and the disciplined execution that has helped us effectively navigate a dynamic environment. I'm proud of our teams as they've worked to offset costs and manage through macro challenges. We're pleased that despite a $0.45 tariff headwind, we expect to deliver adjusted EPS growth for the year.
I'm proud of our teams as they work to offset costs and manage through macro challenges. We're pleased that despite a 45 tariff headwind, we expect to deliver adjusted EPS growth for the year.
An Imaging, it's great to see the pipeline coming together after 4 years of investment. The new products will bring unique capabilities to the market and be key enablers for our sales teams to drive faster growth and higher margins in the Imaging portfolio.
We remain fully committed to our total company medium term targets shared at Investor day, and feel good about the underpinnings that support that growth the fundamentals of our business remains strong.
We're entering a new wave of innovation across the Enterprise and these are some of our boldest ideas. Yet we're confident that we have the right Innovation across all of our segments, a strong commercial strategy and a clear path to accelerate Revenue growth from these new products over the medium term.
Globally, we continue to see a healthy capital equipment market and tenders are improving in China with the recovery ongoing.
While Tcs had a challenging quarter with new leadership and fresh eyes on the portfolio, we expect to see significant improvements in this segment.
In summary, we feel good about our third-quarter performance and the disciplined execution that has helped us effectively navigate a dynamic environment.
I'm proud of our teams, as they've worked to offset costs and manage through macro challenges.
Lastly, as planned we will introduce a significant number of new AI enabled products solutions and services at <unk> as we discussed at our last Investor Conference. These new products are expected to drive significant growth over the medium term and play a key role in margin expansion.
Peter Arduini: We remain fully committed to our total company medium term targets shared at Investor Day and feel good about the underpinnings that support that growth. The fundamentals of our business remain strong. Globally, we continue to see a healthy capital equipment market, and tenders are improving in China with the recovery ongoing. While Patient Care Solutions had a challenging quarter, with new leadership and fresh eyes on the portfolio, we expect to see significant improvements in this segment. Lastly, as planned, we will introduce a significant number of new AI-enabled products, solutions, and services at RSNA. As we discussed at our last investor conference, these new products are expected to drive significant growth over the medium term and play a key role in margin expansion. Plan to join us in Chicago on December 1 and 2. Now let's open up the call for questions. Thank you, Peter.
We're pleased that despite a 45 Cent pair of headwind, we expected to deliver adjusted EPS growth for the year.
We remain fully committed to our total company medium-term targets shared at Investor Day and feel good about the underpinnings that support that growth. The fundamentals of our business remain strong.
Plan to join US in Chicago on December one and now let's open up the call for questions.
Globally. We continue to see a healthy Capital Equipment market and tenders are improving in China, with the recovery ongoing.
Thank you Peter I would like to ask participants to please limit yourself to one question and one follow up operator can you. Please open the line.
While PCS had a challenging quarter with new leadership and fresh eyes on the portfolio. We expect to see significant improvements in this segment.
Thank you so much and as a reminder that is star one one if you have a question and wait for your name to be announced.
To remove yourself with star one again, one moment for our first question.
And it comes from the line of Lawrence <unk> with Wells Fargo. Please proceed.
Lastly, as planned, we will introduce a significant number of new AI-enabled products, solutions, and services at RSNA, as we discussed at our last investor conference. These new products are expected to drive significant growth over the medium term and play a key role in margin expansion.
Hi, good morning, Thanks for taking the Hey, good morning Pete.
Operator: I'd like to ask participants to please.
Plan to join us in Chicago, on December 1st and 2nd. Now, let's open up the call for questions.
Congrats on a nice quarter here.
Operator: Limit yourself to one question and one follow-up.
I wanted to start on China.
Operator: Operator, can you please open the line?
I heard your comments earlier on tenders improving in China.
Operator: Thank you so much. As a reminder, that is star 11 if you have a question, and wait for your name to be announced. To remove yourself, press star 11 again. One moment for our first question, and it comes from the line of Larry Biegelsen with Wells Fargo Securities. Please proceed.
Thank you, Peter. I'd like to ask participants to please limit. Yourself to 1 question and 1, follow-up. Operator, can you please open the line?
Any additional color on what you're seeing how you're thinking about growth. There. This year and next year and I know you won't comment on media reports, but can you comment on how youre thinking about your business in China long term and if you'd consider ways to mitigate the risk or exposure to that market and I had one follow up.
Thank you so much. And as a reminder, that is star 1, 1 1. If you have a question and wait for your name to be announced to remove yourself press star 1 again, 1 moment for our first question.
Peter Arduini: Good morning.
Yes, Larry.
[Analyst 1]: Thanks for taking the. Good morning, Pete. Congrats on a nice quarter here. I wanted to start on China. I heard your comments earlier on tenders improving in China. Any additional color on what you're seeing, how you're thinking about growth there this year and next year? I know you won't comment on media reports, but can you comment on how you're thinking about your business in China long term and if you'd consider ways to mitigate the risk or exposure to that market? I had one follow up.
And it comes from the line of Lawrence Bigles and with Wells Fargo. Please proceed.
As I said in our prepared comments, we're seeing the stimulus kind of tender activity improve and the recovery in the market is ongoing I think that's kind of the headline last quarter I spoke about our second half China sales being lower than the first half and that's playing out as we expected.
Our new leader in the role there will is doing a really nice job has been focused on making investments in market access capabilities and renewing our focus on clinical selling.
Peter Arduini: Yeah, Larry. As I said in the prepared comments, you know, we're seeing the stimulus kind of tender activity improve and the recovery in the market is ongoing. I think that's kind of the headline last quarter. You know, I spoke about our second half China sales being lower than the first half and that's playing out as we expected. Our new leader in the role there is doing a really nice job. He's been focused on making investments in market access capabilities and renewing our focus on clinical selling and where we've implemented those changes, which we're going to be going across the whole country with them. We've seen positive progress both in ultrasound and imaging. You know, look, the market's been challenged over the past two years due to stimulus as well as the anti corruption campaign.
Morning. Thanks for taking the hey, good morning Pete. Uh, congrats on a on a nice quarter here. Um, I I wanted to start on on China. Um, you know, I heard your comments earlier on on tenders improving in China. Um, any any additional color on what you're seeing? How you're thinking about growth there this year and next year and and I know you won't comment on media reports. But can you comment on how you're thinking about your business in China, long term? And if you'd consider ways to mitigate the risk or exposure to that market and I had 1 follow-up,
And where we've implemented those changes which were going to be going across the whole country with them, we've seen positive progress.
yeah, Larry well
<unk> and ultrasound and imaging.
So look the market has been challenged over the past two years due to stimulus as well as the anti corruption campaign that said, we don't see any structural reason to prevent China market returning from growth.
Look to your to your last point that you made look we like the China business. It's one of the largest health care markets in the world.
Significant portion of the population needing better access to care and we're optimistic about its long term potential I would say, we constantly look at our segments or countries or products and assess their growth their margin and ultimately their fit in our portfolio just kind of how we run our business is what.
Peter Arduini: That said, we don't see any structural reason to prevent China market returning from growth. You know, look to your, to your last point that you made. Look, we like the China business. It's one of the largest health care markets in the world. Significant portion of the population needing better access to care and we're optimistic about its long term potential. I would say, you know, we constantly look at our segments, our countries, our products and assess their growth, their margin and ultimately their fit in the portfolio. Just kind of how we run our business. It's what we do.
We do.
That's super helpful. Pete.
For my follow up the press release the slides.
Took the Market's been challenged over the past 2 years due to stimulus as well, as the anti-corruption campaign that said, we don't see any structural reason to prevent China Market to returning from growth.
Talk about revenue growth acceleration.
It sounds like you're still confident in achieving 26 to 28 revenue growth target mid single digit organic growth I just wanted to confirm that.
You know, look to your to your last point that you made. Look, we like the China business. It's 1 of the largest Healthcare markets in the world. Um, significant portion of the population, needing better access to care, and we're optimistic about its long-term potential. I
How much do you need China to recover to hit that goal.
Mid single digit growth on the table for next year. Thank you.
Yes look I would just say over the medium term we feel good about mid single digit our views are the mid single opportunity Hasnt changed for us since we spun in 2023.
[Analyst 1]: That's super helpful, Pete. For my follow up, the press release, the slides, and you know, talk about revenue growth acceleration. It sounds like you're still confident in achieving your 26 to 28% revenue growth target, mid single digit organic growth. I just want to confirm that. You know, how much do you need China to recover to hit that goal? Is mid single digit growth on the table for next year? Thank you.
I would say, you know, we constantly look at our segments, our countries, our products, and assess their growth, their margin and ultimately, they're fit in the portfolio. It's just kind of how we run our business is what we do.
We've invested as we mentioned significant amount in R&D and it takes time for that to pay off I think.
The example that we gave with Avs is a great example of how thats paying off new products that have a faster growth profile because of leadership features a better cost position. So it has higher profitability in that same model will apply to imaging and also tcs. So we're excited about our scenario.
Peter Arduini: Yeah, look, I would just say over the medium term we feel good about mid single digit. Our views are the mid single opportunity hasn't changed for us since we spun in 2023. We've invested, as we mentioned, significant amount in R&D and it takes time for that to pay off. I think the example that we gave with AVS is a great example of how that's paying off. New products that have a faster growth profile because of leadership features, a better cost position, so it has higher profitability. That same model will apply to imaging and also Patient Care Solutions. You know, we're excited about RSNA coming up because you're going to see a lot of these new products coming out that will carry that capability that we just mentioned. I think that's the broader point.
That's super helpful. Uh, Pete for my follow up, the press release, the slides and, uh, you know, talk about Revenue growth acceleration, uh, it sounds like you're you're still confident in achieving your 26 to 28, uh, Revenue growth Target, uh, mid single digit organic growth. It just just want to confirm that. And, you know, how, how, how much do you need China to recover to hit that goal and, and, and is, you know, mid single digit growth on the table for next year. Thank you.
And being up because youre going to see a lot of these new products coming out that will carry that capability that we just mentioned.
That's the that's the broader point look relative to China, consistent with what I've said in the past, if China remains roughly flat and stable market.
Yeah, look, I I would just say over the medium term. We feel good about mid single digits, our views are the mids single opportunity hasn't changed for us. You know, since we spun in 2023, you know, we've invested as we mentioned significant amount in R&D and it takes time for that to pay off. Um, I think the example that
All of our goals relative to mid single digit are intact.
Jay you may wanted to comp up 20.
26, sorry for interrupting.
Sure just Larry and then 'twenty six.
We're in our operating planning process right now so a lot of work to be done there, but I think it's safe to say this year, our expectation is to grow approximately 3% we pointed to record backlogs.
Peter Arduini: Look, relative to China, consistent with what I've said in the past, if you have China remains roughly flat and stable market, you know, all of our goals relative to mid single digit are intact. Jay, you may want to comment.
Standing book to Bill order growth.
At 6% for the last four quarters. So we feel very good about the commercial momentum and the innovation momentum and so as we look at 'twenty six our expectation would be to grow faster than 3%.
We gave with AVS is a great example of how that's paying off new products that have a faster growth profile because of leadership features a better cost position. So it has higher profitability and that same model will apply to Imaging and also PCS. So you know, we're excited about rsna coming up because you're going to see a lot of these new products coming out that will carry that capability that we just mentioned. Um so I think that's the that's the the broader Point look relative to China consistent. With what I've said in the past. If you know, China remains roughly flat and Stable Market, um, you know, all of our goals relative to Mid single digit, are attacked
Jay Saccaro: Yep.
[Analyst 1]: On 26. Sorry for interrupting.
Jay Saccaro: Sure.
[Analyst 1]: Just Larry.
Jay Saccaro: On 2026. We're in our operating planning process right now, so a lot of work to be done there. I think it's safe to say this year our expectation is to grow approximately 3%. We pointed to record backlogs, outstanding book-to-bill order growth at 6% for.
Jay, you may want. Yep, I'm 26. Sorry for interrupting.
So.
Stay tuned for our earnings call in February but at this point in time, we feel very good about the progress that we've made.
Alright, thanks for the very comprehensive answer guys.
Thank you.
Our next question is from Travis Steed with Bank of America Securities. Please proceed.
Peter Arduini: The last four quarters.
Jay Saccaro: We feel very good about the commercial momentum and the innovation momentum. As we look at 2026, our expectation would be to grow faster than 3%. Stay tuned for our earnings call in February. At this point in time, we feel very good about the progress that we've made.
Hey, congrats on a good quarter, maybe the first question I'd have is maybe talk about some of the strength in Q3, and why reiterate the full year revenue guidance and not letting more of that flow through for Q4.
Okay.
Yes. Thanks, Travis we were definitely pleased with the commercial performance in the third quarter.
Yeah, sure. Just Larry on the 26th, um, we're in our operating planning process right now. So a lot of work to be done there but I think it's safe to say this year. Our expectation is to grow. Approximately 3%, we've pointed to record backlogs, Put outstanding book to Bill order growth, um, at 6% for the last 4 quarters. So we feel very good about the commercial momentum, and The Innovation momentum. And so, as we look at 26, our expectation would be to grow faster than 3%. Um, so we'll, you know, stay tuned for, um, our earnings call on February, but, uh, but at this point in time,
[Analyst 1]: All right, thanks for the very comprehensive answer, guys.
We feel very good about the progress that we've made.
As evidence of all the good progress that we're making both from innovation and also our go to market standpoint.
Operator: Thank you. Our next question is from Travis Stead with BofA Securities. Please proceed.
All right, thanks for the uh very comprehensive answer, guys.
Thank you.
We previously said, 2% to 3% in the third quarter, we delivered 4% and I would say a lot of that comes from our ABS business, where we're seeing the dividends have all the innovation investments pay out.
Peter Arduini: Hey, congrats on a good quarter. Maybe the first question I have is maybe talk about some of the strength.
Our next question is from Travis Steed with a Bank of America Securities. Please proceed.
[Analyst 1]: In Q3 and why reiterate the full.
Peter Arduini: Year revenue guidance and not let more.
[Analyst 1]: Of that flow-through for Q4.
Along with some some great work in the field I mean, we did see some particular strength across EMEA and you scan.
Hey, congrats on a good quarter. Uh, maybe the the first question I have is maybe talk about the some of the strengths in in Q3 and and why it reiterate the the full year Revenue governance and not let more of that flow through for for Q4
Jay Saccaro: Thanks, Travis. We were definitely pleased with the commercial performance in the third quarter, and it's evidence of all the good progress that we're making both from innovation and also a go-to-market standpoint. We previously said 2 to 3% in the third quarter; we delivered 4%. I would say a lot of that comes from our AVS business, where we're seeing the dividends of all the innovation investment pay out along with some great work in the field. We did see some particular strength across EMEA and U.S., really driven by healthy CapEx environment and the procedural trends there. Overall, definitely pleased with the third quarter. As we look at the fourth quarter, our current expectation is 3 to 4% growth, very much aligned to our expectations in July. There's a bit of a benefit from the PCs, some of that coming back in the fourth quarter, that product hold.
Really driven by healthy capex environment in the procedural trends there. So overall definitely pleased with the third quarter as we look at the fourth quarter. Our current expectation is 3% to 4% growth very much aligned to our expectations. In July there is a bit of a benefit from the PCF some of that coming.
Back in the fourth quarter that products hold.
But as we as we did the analysis historically, we've seen about a 9% step up from Q3 to Q4.
We're modeling at the midpoint that 9% step up the other thing we look at when we do revenue forecasting as we look at on this idea of secured rate remember about half of our business is.
Is recurring and the other half is equipment related and for the equipment related we have a portion of that business that has delivery dates in the quarter and so at this point in the quarter, we have about 80% of the 50% secured.
Jay Saccaro: As we did the analysis, historically we've seen about a 9% step up from Q3 to Q4. We're modeling at the midpoint that 9% step up. The other thing we look at when we do revenue forecasting is we look at this idea of secured rate. Remember, about half of our business is recurring and the other half is equipment related. For the equipment related, we have a portion of that business that has delivery dates in the quarter. At this point in the quarter, we have about 80% of the 50% secured. We feel very good about where that sits relative to historic levels. It's consistent with that. Having said all of that, what I would say is our confidence in achieving the 3% has clearly increased based on the strong performance that we saw in the third quarter.
Yeah. Thanks, Travis. We were definitely pleased with the commercial performance in the third quarter, um, and it's evidence of of all the good progress that we're making both from Innovation. And also, a go to market standpoint. Um, we previously said 2 to 3% in the third quarter, we delivered 4%. And I would say a lot of that comes from our AVS business where we're seeing the dividends of all the Innovation investment payout. Um, along with some some great work in the field. We did see some particular strengths across EMA and use scan um, really driven by healthy capex environment and the procedural Trends there. So, overall definitely pleased with the third quarter. As we look at the fourth quarter, our current expectation is 3 to 4% growth. Um, very much aligned to our expectations in July. There's a bit of a benefit from, um, the PCS, some of that coming back in the fourth quarter, that product hold. Uh, but as we as we did, the
So we feel very good about where that sits relative to historic levels its consistent with that.
Having said all of that what I would say is our confidence in achieving the 3% has clearly increased based on the strong performance that we saw in the third quarter.
That's great helpful.
And then Ricardo.
Sure you are on track for the $30 million in this year and how you have to think about some of the puts and takes as that ramps over over 2026 and 27%.
Yes Travis.
Look we're excited about this opportunity with mercado things opportunities like this only come around every once in a while I mean, the customer feedback on for condo as been great exceptional image quality over any other type of perfusion capabilities the longer half life unit dose model, all those kind of make it a significant game changing.
[Analyst 2]: That's great.
Business that has delivery dates in the quarter. And so at this point in the quarter, we have about 80% of the 50% secured. Um, so we feel very good about where that fits relative to Historic levels, it's consistent with that. Having said, all of that, what I would say is our confidence in achieving, the 3% has clearly increased based on the strong performance that we saw in the third quarter.
Peter Arduini: Helpful, Pete. Flicardo, just make sure you're on track for the $30 million in.
<unk> innovation for nuclear cardiology, and as I said in the prepared remarks, we're going slow to go fast so for US. It's crucially important at this stage of the launch our customers have an excellent experience and are getting their processes and capabilities in place that they can convert a majority of their patients are forecast to overreach.
[Analyst 1]: This year and how you should think about some of the puts and takes.
Peter Arduini: As that ramps over 2026 and 2027. Yeah, Travis, look, we're excited about this opportunity with Florcato. Opportunities like this only come around every once in a while. I mean, the customer feedback on Florcato has been great. Exceptional image quality over any other type of perfusion capabilities, the longer half-life unit dose model, all those kind of make it a significant game-changing innovation for nuclear cardiology. As I said in the prepared remarks, we're going slow to go fast. For us it's crucially important at this stage of the launch that customers have an excellent experience and are getting their processes and capabilities in place so that they can convert a majority of their patients to Florcato over a reasonable time period. In 2025 we're going to be short of the $30 million, but with the progress we're making, we're really excited about the opportunity in 2026 and beyond.
But that's that's great helpful uh Pete. Uh and then lekato uh just make sure you're on on track for the 30 million and and and this year and and how you should think about some of the puts and takes uh as that ramps over over 2026 and 27.
<unk> time period. So in 2025, we're going to be short of the $30 million.
The progress, we're making we're really excited about the opportunity in 2006 and beyond. So obviously the question is so why slower ramp in 2025 look we made a deliberate decision to prioritize the customer experience rather than short term revenue and look we've slowed the launch for two reasons. One is on the supply side remember each of them.
These products as delivered by our local contract manufacturing.
Operation and we're working to achieve a consistent 95% plus yield.
Which will deliver that exceptional experience to customers. It's taken some time to get to that level, but we are close to achieving that consistently now which is a very good 0.2nd we're working with our customers on their workflow, which is a combination of their billing and patient processes at the site and so where we sit today, we're seeing week over week.
Yeah, Travis. Uh, look, we're excited about this opportunity with forcado things opportunities like this. Only come around, uh, every once in a while. I mean, the customer feedback on forcado has been great, exceptional image quality over any other type of profusion capabilities, the longer, Half-Life unit, dose model, all those kind of make it a significant game-changing Innovation, for nuclear Cardiology. And as I said in the prepared remarks, we're going slow to go fast. So for us, it's crucially important at this stage of the launch. A customers, have an excellent experience and are getting their processes and capabilities in place. So they can convert a majority of their patients or focado over reasonable time period. So in 2025, we're going to be short of the 30 million
Peter Arduini: Obviously the question is, why slower ramp in 2025? We made a deliberate decision to prioritize the customer experience rather than short-term revenue. We've slowed the launch for two reasons. One is on the supply side. Remember, each of these products is delivered by a local contract manufacturing operation and we're working to achieve a consistent 95%+ yield, which will deliver that exceptional experience to customers. It's taken some time to get to that level, but we're close to achieving that consistently now, which is a very good point. Second, we're working with our customers on their workflow, which is a combination of their billing and patient processes at the site. Where we sit today, we're seeing week-over-week improvement on the number of patients treated with Florcato, and we expect that ramp considerably to move forward faster in the fourth quarter.
Improvement on a number of patients treated with for cargo and we expect that ramp considerably to move forward faster in the fourth quarter.
So look with significant interest building our opportunity funnel is actually exceeding what we initially laid out we expect <unk> to have a significant meaningful impact over time and this positions us really well on our mid term expectations were $5 billion by 2020.
If we were able to take 25% of the pet myocardial perfusion market and converted the ocado that would lead to roughly $1 billion a year and so hence why this launch taking at the right pace. We believe is supercritical.
With the progress we're making, we're really excited about the opportunity in 26 and Beyond. So obviously, the question is, so why slower ramp in 20125? Look, we made a deliberate decision to prioritize the customer experience rather than short-term revenue and look, we've slowed, the launch for 2 Reasons. 1 is on the supply side. Remember, each of these products is delivered by a local contract manufacturing. Uh, uh, operation and we're working to achieve a consistent 95% plus yield, um, which will deliver that exceptional experience to customers. It's taken some time to get to that level, but we're close to achieving that consistently now, which is a very good point. Second, we're working with our customers, on their workflow, which is a combination of their billing and patient processes at the site. And so, where we sit today, we're seeing week over week Improvement on the number of patients treated with forcado and we expect that ramp considerably to move forward.
Peter Arduini: With significant interest building, our opportunity funnel is actually exceeding what we initially laid out. We expect Florcato to have a significant meaningful impact over time, and this positions us really well on our midterm expectations for a half a billion dollars by 2028. If we were able to take 25% of the PET myocardial perfusion market and convert it to Florcato, that would lead to roughly $1 billion a year. Hence why this launch, taking at the right pace, we believe is super critical. That's great and thanks a lot and congrats again. Thank you.
That's great.
Thanks, a lot and congrats again.
Thank you.
Thank you. Our next question is from John Lynch with Citibank. Please proceed.
Good morning, and thank you for taking the questions.
I have to I'm, just going to put them upfront could you. Please give us an update on the timing for photon counting and how we should think about that ramping and then the second question has to do with the patient care solutions franchise.
Faster in the fourth quarter. So look with significant interest building, our opportunity funnel is actually exceeding. What we initially laid out. We expect forrado to have a significant meaningful impact over time and this positions us really well on our midterm expectations for a half a billion dollars by 2028. Now, if we were able to take 25% of the pet myocardial profusion market and converted the picado that would lead to write.
How do we think about going from down high single digits. This quarter two we accelerating over the next couple of quarters. Thank you.
Roughly a billion dollars a year and so hence why this launch taking it at the right pace, we believe is super critical.
That's great and and helpful. Thanks a lot and congrats again.
Operator: Thank you. Our next question is from Joanne Wuensch with Citigroup Inc. Exchange Research. Please proceed.
Thank you.
Thanks, Joanne for the question Yeah on photon counting we remain on track to our plans that we have laid out as you've seen on the slide that I referenced in our deck with the new wave of innovation.
Thank you. Our next question, is from Joan W with City Bank. Please proceed.
Operator: Good morning and thank you for taking the questions. I have two, I'm just going to put them up front. Could you please give us an update on the timing for photon counting and how we should think about that ramping? The second question has to do with the Patient Care Solutions franchise. How do we think about going from down high single digits this quarter to reaccelerating over the next couple of quarters? Thank you.
We actually haven't they're listed on page I think it's no surprise that we're ramping up here to be able to talk about it at our biggest radiological show here in the near future.
All of our plans relative to FDA submission, our plans to be able to communicate and talk about it in more detail are on track and again I would just say again very excited about our approach. We are the most unique approach within the marketplace. It's the reason that we went this direction.
Peter Arduini: Thanks, Joanne, for the question. Yeah. On photon counting, we remain on track to our plans that we have laid out. As you've seen on the slide that I referenced in our deck with the new wave of innovation, we actually have it there listed on the page. I think it's no surprise that we're ramping up here to be able to talk about it at our biggest radiological show here in the near future. All of our plans relative to FDA submission, our plans to be able to communicate and talk about it in more detail are on track. I would just say I'm again, very excited about our approach. We are the most unique approach within the marketplace.
Uh, good morning, and thank you for taking the questions. I have two; I'm just going to put them up front. Could you please give us some update on the timing for photon counting and how we should think about that ramping? And then the second question has to do with the patient care solution franchise. How do we think about going from down high single digits this quarter to re-accelerating over the next couple of quarters? Thank you.
It's not to follow the crowd, but to bring something that's going to have a significant impact in the marketplace.
Just on the image quality changes, but actually how <unk> is used and that's where we believe our deep silicon approach is going to make a significant difference in what's called spectral imaging. So.
That's where we are and we hope we'll see at <unk>.
See more of these technologies that I mentioned here on the page Jay maybe you can talk a little bit about Tcs sure. We were disappointed with <unk> performance in the third quarter.
Peter Arduini: The reason that we went this direction is not to follow the crowd, but to bring something that's going to have a significant impact in the marketplace, not just on the image quality changes, but actually how CT is used. That's where we believe our deep silicon approach is going to make a significant difference in what's called spectral imaging. That's where we are and we hope we'll see at the RSNA to see more of these technologies that I mentioned here on the page. Jay, maybe you can talk a little bit about PCs.
Thanks Joanne for the question. Yeah. On photon counting. We, we remain on track, uh, to our plans that we have laid out as you've seen on the slide that I referenced in Our Deck with the new wave of innovation. Um, we actually have it there listed on the on the page. I think it's no surprise that we're ramping up here to be able to talk about it at our biggest radiological show here in the near future. Um, so all of our plans relative to FDA submission, um, our plans to be able to communicate and talk about it in more detail or on on track. And again, I would just say I'm, I'm again very excited about our approach. We are the most unique
Really this comes down to a product hold.
We did take quick action to be ready to ship units as soon as possible.
Our regulatory team did a great job navigating the pathway here and the good news is that we're back in the market shipping will recover some of this in the fourth quarter. Some will bleed into next year, but overall, we feel good with the product back on the market of the 7% sales decline in the quarter about five of that was tied to the <unk>.
Jay Saccaro: Sure. We were disappointed with Patient Care Solutions performance in the third quarter, and really this comes down to a product hold. We did take quick action to be ready to ship units as soon as possible. Our regulatory team did a great job navigating the pathway here. The good news is that we're back in the market.
Product hold and the margin was also significantly in fact impacted.
In fact about half of the margin decline year over year related to this product hold.
We had a big tariff impact as well of about a couple of hundred basis points. So as Pete said or I said in my prepared remarks, we're really excited to have Jeanette onboard.
Peter Arduini: Shipping.
Jay Saccaro: We'll recover some of this in the fourth quarter, some will bleed to next year, but overall we feel good with the product back on the market. Of the 7% sales decline in the quarter, about 5% of that was tied to the product hold, and the margin was also significantly impacted. In fact, about half of the margin decline year over year related to this product hold. We had a big tariff impact as well of about a couple of hundred basis points. As Pete said or I said in my prepared remarks, we're really excited to have Jeannette on board, a seasoned leader, and she's looking carefully at the portfolio, the opportunities to drive growth and enhance margin that will start to pay dividends in the fourth quarter. We will see a meaningful improvement here, and we'll also continue to pay dividends as we migrate into next year.
<unk> leader and she's looking carefully at the portfolio the opportunities to drive growth and enhance margin that will start to pay dividends in the fourth quarter. So we will see a meaningful improvement here and then we'll also continue to pay dividends as we migrate into next year.
Yes.
Okay.
We'll take our next question please.
See more of these technologies that I mentioned here on the page J. Maybe you can talk a little bit about PCS sure. We we were disappointed with PCS performance in the third quarter and really this comes down to a product hold. Um we did take quick action to be ready to ship units as soon as possible. Um our regulatory team did a great job, navigating the pathway here and the good news is that we're back in the market shipping um we'll recover some of this in the fourth quarter, some will bleed to next year. But overall, um we feel good with the product back on the market of the 7% sales decline in the quarter about 5 of that was tied to the product. Hold. Um, and the margin was also significantly. In fact impacted, um, in in fact about half of the margin decline, year-over-year related to this product. Hold. Um, we had a big tariff impact, as well, of about a couple of hundred basis points. So as Pete said, or I said in
Yes. Our next question is from David Roman with Goldman Sachs. Please proceed.
Thank you and good morning, everyone. Appreciate all the detail on.
Some of the new products here.
Maybe first we could go into ABS and specifically talk about some of the opportunities as we see procedure volumes like in EEP potentially start to move into the ASC I think in your earnings presentation from last year in the second quarter you laid out all the key products that you provide to support.
In my prepared remarks, we're really excited to have Janette on board. Um, a seasoned leader, and she's looking carefully at the portfolio and the opportunities to drive growth and enhance margin that will start to pay dividends in Q4. So, we will see a meaningful improvement here, and then we'll also continue to pay dividends as we migrate into next year.
Thank you.
Operator: Let's take our next question, please.
Let's take our next question, please.
[Analyst 3]: Yes.
Operator: Our next question is from David Roman with Goldman Sachs. Please proceed.
In EP lab, but maybe what are you seeing specifically on the opportunity in <unk> and in the ASC setting for EP.
Yes, our next question is from David Roman with Goldman Sachs. Please proceed.
[Analyst 1]: Thank you.
[Analyst 4]: Good morning everyone. Appreciate all the detail on some of the new products here. Maybe first we could go into AVS and specifically talk about some of the opportunities as we see procedure volumes like an EP potentially start to move into the ASC. I think in your earnings presentation from last year, in the second quarter, you laid out all the key products that GE HealthCare provides to support an EP lab. What are you seeing specifically on the opportunity in the ASC setting for EP?
Yes. Thanks for the question I would say look part of this started with this discussion when we talk about <unk> three.
Not just a slogan it's about how we operate which again is this whole part of leadership products that can plug and play across the disease state focus on a disease state. So again cardiology is a broader area, but a specific disease state might be electrical issues with a hard to your point.
How they are addressed and then how digital and tools can bring that together and so for the first part for US was having a lab that wasn't just competitive.
Peter Arduini: Yeah, Dave, thanks for the question. I would say, look, part of this started with this discussion. When we talk about D3, it's not just a slogan, it's about how we operate, which again is this whole part of leadership. Products that can plug and play across the disease state, focus on a disease state. Cardiology is a broader area, but a specific disease state might be electrical issues with the heart to your point, and how they're addressed and then how digital and tools can bring that together. The first part for us was having a lab that wasn't just competitive, but was leadership. I would argue this is really our first cath lab in a long, long time that is a leadership position. We're seeing the uptick of that. When it comes to electrophysiology, we see the opportunity that's out there.
Uh, thank you. Good morning everyone. Appreciate all the detail on on. On some some of the new products here uh maybe first we could go into uh abs and specifically talk about some of the opportunities as we see procedure volumes like an EP potentially start to move uh into the ASC. I think in your earnings presentation from last year in the second quarter, you laid out all the key products that GE provides to support, uh, an EP lab. But maybe, what are you seeing specifically on the opportunity in uh in in in in the ASC setting for EP?
His leadership and I would argue this is really our first cath lab in a long long time that has a leadership position and so we're seeing the uptick of that so look when it comes to electrophysiology, we see the opportunity that's out there pulsed field ablation all the excitement that's in the marketplace, we want to be the partner of choice.
It's a one stop shop to be able to make that happen and so Phil and team I think have done a really nice job. We are uniquely positioned with the alia pulse its small footprint, it's ability to play in the <unk> the vivid pioneer our brand new cardiovascular ultrasound platform does a lot of early assessment.
Yeah, Dave thanks for the the question. I I I would say look part of this started with this discussion. When we talk about D3, you know, it's not just a a slogan. It's about how we operate which again is this whole part of leadership products that can plug and play across the disease State, focus on a disease state. So again Cardiology is a broader area but a specific disease State might be electrical issues with the heart to your point and how they're addressed and then how digital and tools can bring that together. And so,
Transfer esophageal work, while the procedures going on and then our Mac lab, New version, which is the all tax which is the recorder for all of this during the EP procedure. Those all work together and then we have partner relationships with many of the device companies that their products work more integrated with our seed couple that with the new.
Peter Arduini: Pulse field ablation, all the excitement that's in the marketplace. We want to be the partner of choice. It's a one stop shop to be able to make that happen. Phil and team, I think, have done a really nice job. We're uniquely positioned with the Allia IGS Pulse, its small footprint, its ability to play in ESCs. The Vivid Pioneer, our brand new cardiovascular ultrasound platform, does a lot of early assessment esophageal work while the procedure is going on. Our Mac Lab new version, which is the Alt X, is the recorder for all of this during the EP procedure. Those all work together. We have partner relationships with many of the device companies that their products work more integrated with ours.
Reimbursement, that's coming out that fundamentally takes what was 80% of the acute care reimbursement and makes it available in the ASC, we're really set up well to take advantage of that growth and again, we want to be able to come to an institution and say you want to really grow your of EP business worked with us whoever you.
On the device side, we can make it easy for you to stand up and in many cases.
That's really what we're starting to see come through so that's that's kind of how we look at electrophysiology I would say structured heart has a similar framework to it as well.
The first part for us was having a lab that wasn't just competitive, but was leadership. And I would argue this is really our first cat lab in a long, long time. That is a leadership position. And so, we're seeing the uptick of that. So look when it comes to electrophysiology, you know, we see the opportunity that's out there. Pulse Field ablation. All the excitement that's in the marketplace. We want to be the partner of choice. It's a 1 Stop Shop to be able to make that happen. And so, you know, fill a team. I think have done a really nice job. We're uniquely positioned with the Ilia pulse, its small footprint, its ability to play in the esc's. The Vivid Pioneer, our brand new cardiovascular ultrasound platform, uh, does a lot of early assessment, uh, trans esophageal work while the procedure is going on. And then our maclab new version, which is the Altex, which is the recorder for all of this during the EP procedure, those all work together. And then we have partner relationships with many of the
Peter Arduini: You couple that with the new reimbursement that's coming out that fundamentally takes what was 80% of the acute care reimbursement and makes it available in the ASC. We're really set up well to take advantage of that growth. We want to be able to come to an institution, say you want to really grow your EP business, work with us, whoever you use on the device side we can make it easy for you to stand up. In many cases that's really what we're starting to see come through. That's kind of how we look at electrophysiology. I would say Structured Heart has a similar framework to it as well. Very helpful.
Got it.
Very helpful and maybe Jay just on the margin side trying to understand how long. This trend this transition between R&D and Cogs takes place and maybe if you just unpack a little more operationally what's happening I think on the last call you started talking about this it sounded kind of like an accounting <unk>.
Device companies that their products work more integrated with ours. So, you couple that with the new reimbursement that's coming out, that fundamentally takes what was 80% of the acute care reimbursement and makes it available in the ASC. We're really set up well to take advantage of that growth. And again, we want to be able to come to an institution and say, "You want to really grow your EP business? Work with us. Whoever you use on the device side, we can make it easy for you to stand up and..."
But I think it's actually more of an operational dynamics. So how long does this kind of transition last and how should we think about the trajectory of of underlying gross margins and R&D going forward.
In many cases. Um, that's really what we're starting to see, come through. So that's, uh, that's kind of how we look at electrophysiology. I would say structured heart has a similar framework to it as well.
[Analyst 4]: Maybe. Jay, just on the margin side, trying to understand how long this transition between R&D and COGS takes place and maybe if you just unpack a little more operationally, what's happening. I think on the last call you started talking about this. It sounded kind of like an accounting dynamic, but I think it's actually more of an operational dynamic. How long does this kind of transition last and how should we think about the trajectory of underlying gross margins in R&D going forward?
Sure.
Maybe let's just talk.
Overall about the gross margin and then we can get into the specifics of this aspect of it overall in the third quarter. Our gross margin was down 300 basis points year over year.
About 180 basis points of that relates to tariff expenses and.
And then we had 60 basis points of really re class or movement between R&D and cost of goods.
In the quarter and that's about a little over $30 million now overall.
Jay Saccaro: Sure. Maybe let's just talk overall about the gross margin and then we can get into the specifics of this aspect of it. Overall, in the third quarter our gross margin was down 300 basis points year over year, about 180 basis points of that relates to tariff expenses. We had 60 basis points of really reclass or movement between R&D and cost of goods in the quarter. That's about a little over $30 million. Now overall, this is good news because from our standpoint, as products move closer to commercialization, we start to record those product expenses as cost of goods versus R&D. It's net neutral to adjusted EPS. We actually have about 12 products, material programs that are moving very close to commercialization stage. Pete talks about that extensively during his remarks. You'll see that on full display at RSNA.
Like an accounting dynamic, but I think it's actually more of an operational dynamic. So, how long does this kind of transition last, and how should we think about the trajectory of underlying gross margins and R&D going forward?
This is good news because from our standpoint as products move closer to commercialization. We start to report those projects those product expenses as cost of goods versus R&D and so its net neutral to adjusted EPS, we actually have about 12 products material programs.
Sure. Uh, maybe let's just talk overall about the gross margin, and then we can get into the specifics of this aspect of it. Overall, in the third quarter, our gross margin was down 300 basis points year-over-year.
That are moving very close to commercialization stage P talks about that extensively during his remarks youll see that on full display at <unk> and remember about 70% of our total engineering and product program spend sits within R&D. The remaining aspect of 30 sits in Cogs and so.
Overall, I think it's important to note R&D spending or project spending was up for the quarter, but we did see this dynamic. This dynamic will continue somewhat in the fourth quarter and there will be some impact of this next year as well, but it's safe to say, we will see margin expansion in.
In the fourth quarter sequentially North of 50 basis points of gross margin at the midpoint.
Jay Saccaro: Remember, about 70% of our total engineering and product program spend sits within R&D. The remaining aspect, the 30% sits in COGS. Overall, I think it's important to note R&D spending or project spending was up for the quarter, but we did see this dynamic. This dynamic will continue somewhat in the fourth quarter and there will be some impact of this next year as well. It's safe to say we will see margin expansion in the fourth quarter sequentially north of 50 basis points, gross margin at the midpoint. We'll also see, remember that the third quarter also did have an impact from the product hold at a company level that was about 20 basis points. Overall the team is intensely focused on margin expansion and gross margin expansion in particular. This particular item does sort of cloud what I think is a solid overall story.
And we will also see remember the third quarter also did have an impact from the product hold at a company level that was about 20 basis points. So overall the team is intensely focused on margin expansion and gross margin expansion. In particular, this particular item does sort of cloud what I think is a solid overall story.
Basis points of that relates to tariff expenses, and then we had 60 basis points of really reclass or movement between R&D and cost of goods, um, in the quarter. And that's about a little over $30 million now. Overall, um, this is good news, because from our standpoint as products, move closer to commercialization, we start to report those projects with those product expenses as cost of goods versus R&D and so it's net neutral to adjust the EPS. We actually have about 12 products material programs that are moving very close to commercialization Stage, Pete, talks about that extensively during his remarks. You'll see that on full display at rsna and remember about 70% of our total engineering and product program. Spend sits within R&D, the remaining aspect, the 30 fits in cogs and so over.
If you point to the bottom line, we saw 30 basis points of margin expansion in the quarter. Excluding tariffs, we will see more more than that in the fourth quarter on our way to achieving our full year expectation.
Got it very helpful. Thank you.
Thank you.
Next question is from Patrick Wood with Morgan Stanley. Please proceed.
Beautiful thanks, guys.
Last one is really on the ultrasound side of things obviously, one of your peers has some spicy fund with the FDA I think we will Chunghwa has lived through this before with Cleveland and CET any.
Jay Saccaro: If you point to the bottom line, we saw 30 basis points of margin expansion in the quarter excluding tariffs, we'll see more, more than that in the fourth quarter on our way to achieving the full year expectation.
Patients for you when you think about the competitive market on that side.
How that could evolve.
[Analyst 4]: Got it. Very helpful, thank you.
Overall, I think it's important to note R&D spending or project spending was up for the quarter, but we did see this Dynamic, this Dynamic will continue somewhat in the fourth quarter and there will be some impact of this next year as well. But it's safe to say we will see margin expansion um in the fourth quarter sequentially, north of 50 basis points, gross margin at the midpoint. Um and we'll also see remember that the third quarter also did have an impact from the product, hold at a company level. That was about 20 basis points. So overall, the team is intensely focused on margin expansion and gross margin expansion in particular. This particular item does sort of cloud what I think is a a solid overall story. If you point to the bottom line, we saw 30 basis points of margin expansion in the quarter, excluding tariffs. We'll see more of more than that in the fourth quarter, um, on our way to achieving the full year expectation.
We just saw the information as well so I don't really have any comment and there's really no effect in third quarter.
Operator: Thank you. Our next question is from Patrick Wood with Morgan Stanley. Please proceed.
All right. Got it very helpful. Thank you.
The strength of our ABS in Q3 was really about really strong go to market execution and our field teams and the products that we mentioned the vivid pioneer in the venue point of care and logic all of those new products.
[Analyst 5]: Beautiful. Thanks guys. First one is really on the ultrasound side of things. Obviously one of your peers has some spicy fun with the FDA. I think we all, chunk of us, lived through this before with Cleveland and CT. Any implications for you when you think about the competitive market on that side and how that could evolve.
Our next question is from Patrick wood with Morgan Stanley. Please proceed
Got you makes sense.
The other ones actually.
<unk> platform has like a 50% market share if I'm right on the ECG side of things and I know you guys have it you've got a partnership with <unk> and a few other bits but.
Beautiful. Um, thanks guys. I first 1 is really on the ultrasound side of things. Obviously 1 of your peers, has some spicy fun with the FDA, you know. I think we all chunk of us lived through this before with Cleveland and CT any implications for you when you think about the competitive market on that side, um, and how that could evolve
Jay Saccaro: Patrick, we just saw the.
Peter Arduini: Information as well, so I don't really have any comment and there's really no effect in the third quarter. The strength of our AVS in Q3 was really about really strong go to market execution in our field teams, and the products that we mentioned, the Vivid Pioneer and the Venue Point of Care and LOGIQ, all of those new products.
the Patrick, I mean, I I
Is there any interest on the longer term Kodiak commentary market Theres a lot of the patch players that side of things because.
That strength from the ECG side on the software and feels like that with Pat why is that well was that something that you ever thought about.
Yes, so Patrick I think.
Muses to your point, it's the significant position relative to recording of all EKG data really around the world and we have this alive core mode, which is a.
[Analyst 1]: Gotcha. Makes sense.
You just saw the information as well, so I don't really have any comment and there's really no effect in in third quarter, um, the strength of our abs. And, and Q3 was really about really strong, go to market execution in in our field teams. And then the products that we mentioned, the Vivid Pioneer, and the venue point of care and, and logic, all of those new products.
[Analyst 5]: The other one's actually, you know, your MUSE platform has like a 50% market share if I'm right on the ECG.
Jay Saccaro: Side of things.
[Analyst 5]: I know you guys have, you've got a partnership with the Live core and a few other bits, but is there any interest on the longer term cardiac territory market? There's a lot of the patch players that side of things, because that strength on the ECG side on the software end feels like that would pair.
Portable handheld device that individual's would use and that can be recorded in the base today, we have customers that actually after an EP procedure. When they are sent home there'll be sent home with the alive core device.
Peter Arduini: Where is that?
They do spot checks on themselves to make sure how effective the ablation actually was that data all connects directly back into our.
[Analyst 5]: Is that something you've ever thought about?
[Analyst 1]: Yeah.
Makes sense. Um, the other ones actually, you know, your Muse platform has like a 50% market share. If I'm right on the ECG side of things and I know you guys have it, you've got a partnership with the live core and a few other bits. But, you know, is there any interest on, you know, the longer term, you know, cardiac dermatory Market. There's a lot of the patch players that side of things. Cuz you know, that strength, on the ECG side, on the software end feels like that would pair, where is that? Well, is that something that you've ever thought about?
Jay Saccaro: Patrick, I think, you know, muses to your point.
Peter Arduini: It's the significant position relative to recording of all EKG data really around the world. We have this Alive Core mode, which is a portable handheld device that individuals would use and that can be recorded in the base. Today we have customers that actually, after an EP procedure, when they're sent home, they'll be sent home with the Alive Core device and they do spot checks on themselves to make sure how effective the ablation actually was. That data all connects directly back into our system. That's there today. I think that where you're going with this is exactly a big part of when we talk about CareIntellect. The perinatal example is one of those where we're connecting all this information and serving it up in a way that makes it very easy to use for that caregiver.
Our system. So so that's there today, but.
But I think that where youre going with this is exactly a big part of when we talk about care and elect the.
Perinatal example is one of those where we're connecting all of this information and serving it up in a way that makes it very easy to use for that caregiver. So in any case you brought up would be in the cardiology world.
Perineal Perinatal play is obviously in labor and delivery, but I think youre going to see more and more of these departmental solutions come out from US here in 'twenty six under the branding of <unk>. So thanks for the question.
Thanks, guys.
Thank you. Our next question is from Vijay Kumar with Evercore ISI. Please proceed.
Hi, guys. Thanks for taking my question and congrats on the nice screen here.
Peter Arduini: In the case you brought up, it would be in the cardiology world; perinatal play is obviously in labor and delivery. I think you're going to see more and more of these departmental solutions come out from us here in 2026 under the branding of CareIntellect. Thanks for the question.
Maybe my first one for you.
And I saw you guys signed a distribution agreement with the CDO on your pharma diagnostics side for <unk>.
It is.
My understanding with CBL.
[Analyst 1]: Thanks guys.
Represents maybe Pat or serves half the U S market is that is that the right assumption have they started shipping this product in that they have the capability to ship. This weekend I'm curious on how that partnership is evolving.
Play is in labor and delivery but I think you're going to see more and more of these departmental Solutions come out from us here in in 26 Under The Branding of care intellect. So thanks for the question.
Operator: Thank you. Our next question is from Vijay Kumar with Evercore ISI. Please proceed.
Thanks guys.
[Analyst 2]: Hi guys, thanks for taking my question and congrats on the next screen here. Pete, maybe my first one for you. I saw you guys sign a distribution agreement with CDL on your Pharmaceutical Diagnostics side for Florcato. Is my understanding of CDL represents, maybe or serves half the U.S. market, is that the right assumption? Have they started shipping this product and do they have the capability to ship this on weekends?
Thank you. Our next question is from Vijay Kumar with evercore. Isi, please proceed.
Yes, no look a CDL and their group cardio Nasdaq's is a large part of the of the U S pet market and they actually have a full distribution reach into individual cardiology offices, typically with rubidium, but our strategy is working along with them.
Hi guys. Uh, thanks for taking my question and congrats on the next screen here. Uh, Pete, maybe my my first 1 for you. Um, and I saw you guys sign sign, uh, a distribution agreement with the CDL, uh, on, on your Pharma Diagnostics, uh, side for, uh, for KO.
Obviously convert many of those customers over into for condo.
We're just getting started as you know we announced earlier this quarter. It typically takes.
[Analyst 1]: I'm curious.
[Analyst 2]: Curious on how the partnership is evolving.
60 to 90 day windows cycle to move through but all of the.
Peter Arduini: Yeah, no, look, CDL and their group Cardio Navx is a large part of the U.S. PET market and they actually have a full distribution reach into individual cardiology offices, typically with rubidium. Our strategy is working along with them to obviously convert many of those customers over into Florcato. We're just getting started. As you know, we announced earlier this quarter. It typically takes, you know, 60, 90-day window cycle to move through. All of the customers that have seen it on their side are very excited about it. I think the economics, the clinical capabilities, all of those play out to be a really positive opportunity. A higher percentage of that conversion of that group moves us very close along our goals that we've laid out over the medium term of $500 million. They're a key part of it and starting out quite well.
Customers that have seen it on their side are very excited about it I think the economics.
Clinical capabilities all of those play out to be a really positive opportunity and so a higher percentage of that conversion of that group moves us very close along our goals.
That we've laid out over the medium term of $5 billion and so there are a key part of it and starting out quite well.
Understood.
And then <unk>.
My related question on just look at your equipment book to Bill Capital book to Bill. If you will last seven quarters you've range at around one one crew.
And I know fiscal 'twenty five.
Some of the revenue recognition was impacted by timing of delivery, which was pushed out.
So when you look at 'twenty six Pete is there anything unusual about.
Delivery dates on these orders.
[Analyst 2]: Understood. A related question on that, just looking at your Eric Frickman book.
Any any change in cancellation trends or cancellation trends been stable. Thank you.
Peter Arduini: To bill, capital book-to-bill.
[Analyst 2]: You will last seven quarters, you range at around 1.12. I know fiscal 2025, some of the revenue recognition was impacted by timing of delivery which was pushed out. When you look at 2026, Pete, is there anything unusual about delivery dates on these orders, and any change in cancellation trends, or cancellation trends been stable? Thank you.
Yes, Vijay we're definitely.
Happy with the performance in terms of equipment book to Bill.
In terms of overall book to Bill in terms of record level of backlog and then importantly, this trailing four quarters' orders growth, which we think is perhaps a better indicator of performance then looking it on a quarterly basis and so as we approach 2026, we think to set.
Hep is pretty good.
We guided to approximately 3% this year.
Jay Saccaro: Yeah, Vijay, we're definitely happy with the performance in terms of equipment book-to-bill, in terms of overall book-to-bill, in terms of record level of backlog, and then importantly this trailing four quarters orders growth, which we think is perhaps a better indicator of performance than looking at it on a quarterly basis. As we approach 2026, we think the setup is pretty good. We guided to approximately 3% this year. There's a lot of work to be done to finalize our plan, but our expectation is we'll grow faster than that next year. A lot of that comes down to the strength of the capital book that we currently sit on today.
We will there is a lot of work to be done to finalize our plan, but our expectation is we'll grow faster than that next year and a lot of that comes down to.
The strength of the capital book that we currently sit on today.
And just sorry on cancellations here.
Cancellations as normal levels, we haven't seen any major.
Major changes in those.
And cancellation rates Vijay.
Thank you.
Thank you. Our next question is from Matt Mcclintock with Barclays. Please proceed.
Hey, Thanks electric taking the question.
One one follow up on.
Sort of rolling some of these new systems next year photon counting.
Yeah, BJ. We're we're definitely uh, happy with the performance, in terms of equipment book to bill. Um in terms of overall book to bill in terms of record level of backlog. And then importantly, this trailing 4 quarters orders growth, which we think is perhaps a better indicator of performance than looking at, on a quarterly basis. And so as we approach 2026, we think the setup is pretty good. Um, we got it to approximately 3%, this year. Um, we we will, you know, there's a lot of work to be done to finalize our plan, but our expectation is will grow faster than that next year. And a lot of that comes down to, um, the strength of the capital book that we currently sit on today.
[Analyst 1]: Sorry.
Jay Saccaro: On cancellations, Jay, cancellations is normal levels. We haven't seen any major deteriorate, major changes in those in cancellation rates.
Total body.
Thank you. Sorry, I'm cancellations here.
Just wondering if you could.
<unk> 2006 question, but.
Talk a little bit about where our launch relaunch it like that in mid year and ended the year, what does that look like in terms of.
[Analyst 1]: Vijay, thank you.
Cancellations is nor normal levels. We haven't seen any, uh, major deter M major changes in those, um, and cancellation rates. BJ.
Thank you.
Operator: Thank you. Our next question is from Matt Miksic with Barclays. Please proceed.
Capturing orders capturing interest building a pipeline.
[Analyst 1]: Hey, thanks so much for taking the question. One follow up on the sort of rollout of some of these new systems. Mix your proton counting and total body. Just wondering if you could, I know it's the 26th question, talk a little bit about for launches like that, say mid year and end of year, what does that look like in terms of capturing orders, capturing interest, building a pipeline ahead of that understanding. I'm sure your customers are aware that these are coming also. What's the shape of that? I have one quick follow up.
Thank you. Our next question is from Matt MC with Barkley's, please proceed.
Yes.
Head of that understanding.
Customers are aware of it.
Coming also.
With the shape of that.
One quick follow up.
Yes.
Each of the products is unique based on their regulatory approval filed some might be approved in Europe for some might be in the U S. So there's a little bit of a mix of that the first part is to be able to make the announcement and get customers understanding when it's coming to your point there are certain products like full body pad.
And photon counting we've been more transparent that are coming and so a big part of this is when they come out as they already have an order for an existing system and they want to upgrade to the other how can you do that many of our design features have been done so that the footprint.
Peter Arduini: Yeah, Matt, obviously each of the products is unique based on their regulatory approval files. Some might be approved in Europe first, some might be in the U.S., so there's a little bit of mix of that. The first part is to be able to make the announcement and get customers understanding when it's coming. To your point, there are certain products like Full Body PET and Photon Counting, we've been more transparent that are coming. A big part of this is when they come out is, you know, if they already have an order for an existing system and they want to upgrade to the other, how can you do that? Many of our design features have been done so that the footprint matches the predicate product the best it can. There's minimal site disruption that can help with faster turnaround.
Hey, thanks so much for taking the question. Um, so, 1 1 follow-up on, um, the sort of roll out of some of these new systems next year, proton, counting and, and, and total body. Um, just wondering if you could, I know, I know it's 26 question but, uh, talk a little bit about for a long for launches like that and maybe you're an end of year. Um, you know, what does that look like in terms of uh, you know, capturing orders, capturing interest building a pipeline? Um, you know, that ahead of that understanding that I'm sure your customers are aware that these are coming also and just, you know, what's the shape of that? Uh, then I have 1 quick followup,
As the predicate product the best it can so theres minimal site disruption that can help with faster turnaround in most cases, we've done that with with our products that were coming out, but we typically have a fleet discussion with our big customers about.
What products do you have how are you evolving your product is the big part of what our field teams do a very good job with and having customers be thinking about what's budgetary dollars that they need to be having thinking about which products are probably need to be upgraded based on age but also based on what you want to do I think back to the question about.
EP if thats a focused plan for you what are you going to be doing with your fleet. So in many cases customers have been already thinking about that but until we actually announce it and give dates on availability, which RSA for us tends to be one of those milestones in radiology.
Peter Arduini: In most cases we've done that with our products that were coming out. We typically have a fleet discussion with our big customers about what products do you have, how are you evolving your product. This is a big part of what our field teams do a very good job with and having customers be thinking about what budgetary dollars that they need to be having, thinking about which products are probably need to be upgraded based on age, but also based on what you want to do. I think back to the question about EP, if that's a focused plan for you, what are you going to be doing with your fleet?
When people really then start doing the final planning.
Got it okay. So for.
While some might be approved in Europe for some might be in the US. So there's a little bit of of mix of that. The, the first part is to be able to make the announcement and get customers understanding, when it's coming to your point. There are certain products like full body pet and Photon counting. We've been more transparent that are coming. And so, a big part of this is when they come out is, you know, if they already have an order for an existing system and they want to upgrade to the other. How can you do that? You know, many of our design features have been done so that the footprint uh, matches the predicate product, the best it can. So, there's minimal sight disruption that can help with faster. Turnaround, in most cases, we've done that with, uh, with our products that were coming out, but we, we typically, you know, have a, a fleet discussion with our big customers about, you know, what products do you have? How are you evolving your product? This is a big part of what our field teams do a very good job with and having customers be thinking about what budgetary dollars
These may be one of these that might be next year. It always today and in that kind of makes it official.
From what Youre, saying it sounds like.
And then any one of the things that otherwise go ahead I'm sorry.
Peter Arduini: In many cases customers have been already thinking about that, but until we actually announce it and give dates on availability, which RSNA for us tends to be one of those milestones in radiology, that's when people really then start doing the final planning.
We're going to talk a lot about all of our big our big launches. So I would say expect to here.
A good dozen of high impact products that we'll be talking about at RSA.
[Analyst 1]: Got it. Okay. For at least maybe one of these that might be next year at RSNA, and then that kind of makes it official from what you're saying, that sounds like. I mean, one of the things I don't want to—go ahead, I'm sorry. This year at RSNA, we're going to.
that they need to be having thinking about where which products are probably need to be upgraded based on age. But also, based on what you want to do, I think back to the question about EP, if that's a focused plan for you, what are you going to be doing with your Fleet? So in many cases customers have been already thinking about that. But until we actually announced it and give dates on availability, which rsna for us tends to be 1 of those milestones in Radiology. Umm, that's when people really then start doing the final planning.
That's great look forward to it.
And then just I know this is.
Sort of one big broad topics.
Yeah.
A lot and nothing sometimes at the same time, but.
Got it. Okay, so, um, for for at least, maybe 1 of these that might be next year at rsna and then that kind of makes it official is is someone you're saying that sounds like um,
Just.
I really admire I think a lot of folks recognize how much work you've done on.
Peter Arduini: Talk a lot about all of our big launches. I would say expect to hear a good dozen of high impact products that we'll be talking about at RSNA.
<unk>.
Sort of approved.
Software is device.
Implications and ROE.
A lot of investment in this area.
No.
[Analyst 1]: That's great. Look forward to it. I know this AI is sort of one of these big broad topics that means a lot and nothing sometimes at the same time.
In the results that you are printing in the growth that you're showing.
And then, I mean, one of the things I don't want to go ahead, I'm sorry. Sure, this year at RSNA, we’re going to, you know, talk a lot about all of our big launches. So I would say, you know, expect to hear a good dozen of high-impact products that we will be talking about at RSNA.
Where and when and how do you think this is playing through your your your growth in.
Engagement with your customers.
Peter Arduini: Really admire.
Is it a growth is it in.
[Analyst 1]: I think a lot of folks recognize how much work you've done on sort of approved software as device applications and rollout and investment in this area, in the results that you're printing and the growth that you're showing. Where and when and how do you think this is playing through your growth and engagement with your customers? Is it in growth? Is it in, I don't know, defensive ability to defend accounts, go deeper in accounts? Just a general, where do you see the value that you've invested playing out in the economic returns and growth in your business?
Sure.
I don't know defensive ability to defend accounts.
Deeper at accounts.
Just a general where do you see the value that you invested playing out.
Economic returns in growth in your business.
That's great. Look forward to it. Um then just I I know this is AI sort of 1 of these, you know, big broad topics, that sort of, you know, means a lot and nothing sometimes at the same time. But um, just uh, how, you know, I really admire I think a lot of folks recognize how much work you've done on, you know, uh, on sort of approved the, you know, software device, uh, applications and and roll out an investment in this area.
Yes, Matt I'll just give you two quick examples one is avs this quarter youre seeing it it's loaded all of these products with different artificial intelligence capabilities that result in superior performance versus competition. So we actually are getting better price.
You know, where in the results that you're Printing and the growth that you're showing, you know, where where and when, and how do you think this is playing through your your your growth and and you know, um engagement with your, your customers? Um, is it in growth? Is it in?
A higher capture rate. So if you look at this quarter, we were actually up.
And margin as well that's also due to the redesign that we've had to leverage what we've called platforming. So the combination of those two together has been able to enable that the second phase and so and then all of these new products like the ones I mentioned for our scenario going to have that same type of AI inside this care intellect.
Peter Arduini: Yeah, Matt, I'll just give you two quick examples. One is AVS. This quarter you're seeing it, it's loaded. All of these products with different artificial intelligence capabilities that result in superior performance versus competition. We actually are getting better price and higher capture rate. If you look at, you know, this quarter, we were actually up in margin as well. That's also due to the redesign that we've had to leverage what we've called platforming. The combination of those two together has been able to enable that, the second phase. All of these new products like the ones I mentioned for RSNA are going to have that same type of AI inside. This CareIntellect platform is a big deal for us because this is where we start actually having a departmental solution that starts connecting multiple modalities or multiple data flows to bring kind of longitudinal solutions.
You know, is it in? I don't know defensive you know ability to defend accounts uh to go deeper in accounts, you know. Just just a general where do you see the value that you've invested playing out in in the economic returns and growth in your business?
<unk> is a big deal for us because this is where we start actually having a departmental solution that starts connecting multiple modalities or multiple data flows to bring kind of longitudinal solutions and so we're just entering into that phase, it's labor and delivery as the first one what I would argue relative to broad.
SaaS and Standalone applications, that's really our first wave that we're going to see bigger capabilities coming out there.
And again price and added capture rate, where we're winning share typically it comes back to a really good device, but honestly the AI and the software components of it making the differentiation in the eyes of customers on a J if you'd add anything yes sure at the Investor Day, Matt We talked about digital revenue expanding from $1 2 billion to $1 8 billion.
Peter Arduini: We're just entering into that phase. This labor and delivery is the first one. I would argue relative to broader SaaS and standalone applications, that's really our first wave that we're going to see bigger capabilities coming out there. Again, price and added capture rate where we're winning share. Typically it comes back to a really good device, but honestly, the AI and the software components of it making the differentiation in the eyes of customers. I don't know Jay, if you'd add anything.
Yeah, Matt I I'll just give you 2 quick examples. 1 is AVS this quarter, you're seeing it, it it's loaded. All of these products with different, artificial intelligence capabilities, that resulted in Superior, performance versus competition. So we actually are getting better price uh, and higher capture rate. So, if you look at, you know, this quarter, we were actually up uh, in margin as well. That's also due to the redesign that we've had to leverage what we've called platforming. So the combination of those 2 together has been able to to enable that the second phase and so. And then all of these new products, like the ones I mentioned for RS and they are going to have that same type of AI. Inside this care intellect platform is a big deal for us because this is where we start actually having a departmental solution that starts connecting multiple modalities or multiple data flows to bring kind of a longitudinal solution. And so we're just
By 28, and we're well on track with respect remains an important growth engine and I would say implement implementation is going really well no. Notably we went from 85 AI enabled FDA device authorizations last year to 100. So we're pleased with where we sit with AI enabled.
Devices, its an important unlock her but what we're seeing is.
As Pete said a lot of this is just a great way to differentiate our portfolio of products.
Jay Saccaro: Yeah, sure. At the investor day, Matt, we talked about digital revenue expanding from $1.2 billion to $1.8 billion by 2028. We're well on track with respect to that. It remains an important growth engine, and I would say implementation is going really well. Notably, we went from 85 AI-enabled FDA device authorizations last year to 100. We're pleased with where we sit with AI-enabled devices. It's an important unlocker. What we're seeing is, as Pete said, a lot of this is just a great way to differentiate our portfolio of products.
That's great. Thanks for the color.
Thank you. Our next question is from Robert Marcus with Jpmorgan. Please proceed.
Oh, great. Thanks for taking the question so two for me.
First I want to start with a high level question. It's been about a year. Since you gave the long range plan at the Analyst Day last November.
Just wondering.
One year in how you think you are stacking up versus it do you feel like Youre still on track and any puts and takes you want to highlight.
[Analyst 1]: That's great. Thanks for the color.
5, AI enabled FDA device authorizations last year to 100. So we're we're pleased with where we sit with AI enabled devices. It's an important unlocker, but what we're seeing is, um, as Pete said, a lot of this is just a, a great way to differentiate our portfolio of products.
Operator: Thank you. Our next question is from Robbie Marcus with JPMorgan Chase & Co. Please proceed.
That's great. Thanks for the caller.
As we just think about the outlook on growth and margins.
No Ravi Thanks for the question look I think relative to mid single digit growth as I've mentioned before we feel quite good about the ability to be able to achieve that this year.
[Analyst 1]: Oh great.
[Analyst 6]: Thanks for taking the questions. Two for me. First, I want to start with a high level question. It's about a year since you gave the long range plan at the analyst day last November. Just wondering one year in how you think you're stacking up versus it. Do you feel like you're still on track and any points and takes you want to highlight as we just think about the outlook on growth and margins?
Thank you. Our next question is from Robert, Marcus, with JP Morgan, please proceed.
Okay. Uh, thanks for taking the questions. Uh, 2 from a um,
When added complexities with tariffs and things that we're navigating through but we're navigating that well.
And so from a margin standpoint to being at.
At 17% to 20% plus range. We also feel very good about I think the underpinning of that is what we're being able to do within the field with our commercial teams I think our go to market.
First, I want to start with the high level question. It's bad about a year since you gave the, uh, long range plan at the analyst day, last November. Um, just wondering, you know, 1 year in how you think your stacking up versus it, do you feel like you're still on track and any puts and takes? You want to highlight, um, as we just think about the outlook on, on growth and margins.
Jay Saccaro: Yeah, Robbie, thanks for the question.
Peter Arduini: Look, I think relative to mid single digit growth, as I've mentioned before, we feel quite good about the ability to be able to achieve that this year. There's been added complexities with tariffs and things that we're navigating through, but we're navigating that well. From a margin standpoint, to be in that 17 to 20% plus range, we also feel very good about, I think the underpinning of that is what we're being able to do within the field with our commercial teams. I think our go to market execution has been very good both in large enterprise deals and individually at the street level. Some of that then comes back to this product portfolio. What we said and when we would launch products, we're right onto those dates.
Execution has been very good both in large enterprise deals and individually at the street level. Some of that then comes back to this product portfolio.
We said in when we would launch products, we're right on to those dates whether it be on the pharmaceutical side or be on the device side. All of those are lining up as we laid out back in that Investor day back in November. So again, it's one of the reasons that we're very excited about this.
Yeah, Rodney, thanks for the question. Uh, look, I I think relative to Mid single digit growth because, as I've mentioned before, we feel quite good about the ability to be able to achieve that this year, you know, there's been, uh, added complexities with tariffs and things that we're navigating through, but we're navigating that well, um, and so from a margin standpoint to be in the at 17 to 20% plus range. We, we also feel very good about I I think the under
And a big Radiological meeting in Chicago in December 1st and second because thats going to showcase many of the products, where we had some honestly gaps in the portfolio and secondly, how those gaps are not only filled but we come out with a product that's actually significantly different than what competition has so.
Peter Arduini: Whether it be on the pharmaceutical side or be on the device side, all those are lining up as we laid out back in that investor day back in November. It's one of the reasons that we're very excited about this RSNA big radiological meeting in Chicago December 1st and 2nd because that's going to showcase many of the products where we had some honestly gaps in the portfolio and secondly how those gaps are not only filled, but we come out with a product that's actually significantly different than what competition has. That's kind of where we stand there and we feel quite good about it.
Kind of where we stand there and we feel quite good about it.
Great really helpful. One quick follow up on from Ocado. It sounds like it's going a little slower this year still confident in the long run maybe.
Maybe you could just give us a little more on what GE healthcare can do to help streamline the workflow conversion. There is obviously a change at the hospital.
Level on on what they need to do and how to source. It. So maybe just help us on what investments youre doing to help advance that and.
[Analyst 4]: Great.
[Analyst 6]: Really helpful. One quick follow-up on Florcato. Sounds like it's going a little slower this year. Still confident in the long run.
Understanding of that is, you know what we're being able to do within the field with our commercial teams, I think our go to market, uh, execution has been very good both in large Enterprise deals and individually at the street level. Some of that then comes back to this product portfolio. You know what we said and when we would launch products, we're right on to those dates, whether it be on the pharmaceutical side or be, uh, on the device side. Uh, all those are lining up as we laid out back in uh that investor day back in in November. So again, it's 1 of the reasons that we're very excited about this. Parsa the big radiological meeting in Chicago December 1st and 2nd because that's going to Showcase many of the products where we had some honestly gaps in the portfolio. And secondly how those gaps are not only filled but we come out with a product that's actually significantly different than what competition has. So uh that's kind of where we stand there and we feel quite good about it.
Do you think you can be back on track to your goals in 2026.
So the short answer is absolutely back on track to our goals in 2026, and it starts with the opportunity funnel, meaning people that wanted to buy and convert their for condo is much larger than we initially envision.
Peter Arduini: Maybe you could just give us a.
[Analyst 6]: little more on what GE HealthCare can do to help streamline the workflow conversion. There's obviously a change at the hospital level on what they need to do and how to source it. Maybe just help us on what investments you're doing to help advance that. Do you think you could be back on track to your goals in 2026?
That's 0.1 and again why is that that comes back to anyone that sees this product. It starts from an image quality standpoint, and its ability to a diagnosis is second to none. So it starts with that I think the economics now are clear on the private pay side as well as on.
Great really helpful. Uh, 1 quick follow-up on for furado sounds like it's going a little slower this year still confident in the long run. Um maybe you could just give us a little more on what G Healthcare can do to help streamline the the workflow conversion. There's obviously a change at the hospital. Um,
[Analyst 1]: Thanks.
Peter Arduini: The short answer is absolutely back on track to our goals in 2026. It starts with the opportunity funnel, meaning people that want to buy and convert the Florcato is much larger than we initially envisioned. That's point one. Why is that? That comes back to anyone that sees this product. It says from an image quality standpoint and its ability to aid diagnosis is second to none. It starts with that. I think the economics now are clear on the private pay side as well as on the Medicare piece. As far as how the models work, they actually work quite well for customers. All of those things are in place. As I previously mentioned, getting those CMOs running, we have the recipe, but now the recipe is kicking in place to have 95%+ between now and the end of the year.
Level on on what they need to do and how to Source it. So maybe just help us on what investments you're doing to help advance that. And um, do you think you could be back on track to your goals in 2026? Thanks.
The Medicare piece and as far as how the models work they actually worked quite well for for customers. So all of those things are in place and as I previously mentioned.
Getting our CMO is running we have the recipe.
So short answer is absolutely back on track to our our goals in 2026 and it starts with the opportunity funnel. Meaning people that want to buy and convert their focado is much larger than we initially.
But now the recipe is kicking in place to have 95% plus.
Between now and the end of the year, we're going to ramp that at the right level of speeds. So again, what does that mean, when you get a customer new customer and it might be only doing one to two patients you want to have those one to two patients have great great experience and then maybe 60 days and they moved to 12 to 15 patients and that ramp can happen very very quick.
<unk> once they have their process in place the processes Ravi are no different than what you would think in other areas. When you Avenue product you bring in a drug you want to do your first billing to your private payers do you get the billing back that process is working.
Peter Arduini: We're going to ramp that at the right level of speed. What does that mean when you get a new customer in, and they might be only doing one to two patients? You want to have those one to two patients have great, great experience, and then maybe 60 days in, they move to 12 to 15 patients. That ramp can happen very, very quickly once they have their process in place. The processes, you know, Robbie, are no different than what you would think in other areas. When you have a new product you bring in and a drug, you want to do your first billing to your private payers, do you get the billing back? That process is working well.
Well youre flow about how you actually do the reads.
So youre cardiologists in your department, referring for these procedures right software on the systems. Those are the things that we now have a really tight structure in place to bring people up in the case of like CDL. They have all of that in place. So their ramp is actually a much faster capability than someone less.
So that's that's Point 1 and and again why is that that comes back to anyone that sees this product it says from an image quality standpoint and its ability to to Aid diagnosis is second to none. So it starts with that, I think the economics now are clear on the private type pay side as well as on uh, the Medicare piece and as far as how the models work, they actually work quite well for for customers. So all of those things are in place and as I previously mentioned, you know, getting a CMOS running, we, we have the the recipe. Um, but you know, now the recipe is kicking in place to have 95% plus, um, between now and the end of the year. We're going to ramp that at the right level of speed. So again, what does that mean? Well, you get a customer new customer and they might be only doing 1 to 2 patients, you want to have those 1 to 2 patients, have great, great experience and then maybe 60 days in they move.
Just say, that's new to the area or had in oncology practice and now youre, bringing up as the cardiology practice. So we're very confident that our ability to ramp those and again. The most important thing is do customers look at this and say, it's a game changer.
Peter Arduini: Your flow about how you actually do the reads, so your cardiologist in your department referring for these procedures, the right software on the systems, those are the things that we now have a really tight structure in place to bring people up. In the case of CDL, they have all that in place. Their ramp is actually a much faster capability than someone, let's just say, that's new to the area or had an oncology practice and now you're bringing up as a cardiology practice. We're very confident that our ability to ramp this. The most important thing is do customers look at this and say.
And so I think that that's the key and then lastly is the cardiology. The ACC came out with guidelines that basically say this is the best direction to go for myocardial perfusion. So we've got all of those tail winds and again the conversion factor here I think we will ramp up rather quickly, but we wanted.
Obviously kind of lay out where we actually are for the year and talk about why it's so important to do this the right way and be deliberate because in the long run. This has clearly the potential to be a $1 billion drug at some point over in the future.
Jay Saccaro: It's a game changer?
Peter Arduini: I think that's the key. Lastly, the cardiology, the ACC came out with guidelines that basically say this is the best direction to go for myocardial perfusion. We've got all of those tailwinds. The conversion factor here I think will ramp up rather quickly. We wanted to obviously kind of lay out where we actually are for the year and talk about why it's so important to do this the right way and be deliberate because in the long run this has clearly the potential to be a billion dollar drug at some point over in the future.
Thanks, a lot I appreciate it.
Thank you and our last question comes from the line of Anthony Petrone with Mizuho Americas. Please proceed.
Thanks, and congrats on the quarter Hills I'll stick with located on one on tariffs.
Maybe Pete to expand you mentioned in it.
A larger pet and maybe possibly pet Cts backlog.
Software on the systems. Those are the things that we now have a really tight structure in place to bring people up. And the case of like CDL, they have all that in place. So their ramp is actually, uh, a much faster capability than someone. Let's just say that's new to the area or had an oncology practice and now you're bringing up as a cardiology practice. So, we're very confident that our ability to ramp this. And again, the most important thing is do customers. Look at this and say it's a game changer. Um, and so I I think that's the that's the key. And then lastly is, you know, the the Cardiology the ACC came out with guidelines that basically say, this is the best direction to go for myocardial profusion. So we've got all of those Tailwinds and again the conversion factor here I think will ramp up rather quickly. Um but we wanted to obviously kind of lay out where we actually are for the year and and talk about why it's so important to do this the right way and be deliberate.
Maybe how much of that is being driven by flow caito.
Does the existing installed base within GE.
[Analyst 6]: Thanks a lot.
Because in the long run you know this has clearly the potential to be a billion dollar drug at some point over in the future.
[Analyst 1]: Appreciate it.
Operator: Thank you. Our last question comes from the line of Anthony Petrone with Mizuho Securities USA. Please proceed.
<unk> systems does that support this getting to $1 billion or do you need some of that on the capital side to be released and in order to sort of let flow caito flourish here a little bit and then quickly on tariffs it's stood at a net net.
Thanks a lot. Appreciate it.
[Analyst 3]: Thanks and congrats on the quarter here. I'll stick with Florcato. One on tariffs, maybe Pete to expand. You mentioned a larger PET and maybe possibly PET CT backlog, maybe. How much of that is being driven by Florcato? Does the existing install base within GE of PET CT systems, does that support this getting to a billion dollars? Do you need some of that on the capital side to be released in order to sort of let Florcato flourish here a little bit? Quickly on tariffs, it stood at a net negative $0.45 headwind for this year. All else equal, the company was talking about mitigation efforts into 2026. How much of the negative $0.45 can be offset into 2026? Thanks.
Thank you in our last question, comes from the line of Anthony. Petrin with mizuho Americas, please proceed.
Negative 45 cent headwind for this year.
All else equal the company was talking about mitigation efforts into 26, how much of the negative 45 can be offset into 2026.
Uh, thanks and congrats on the quarter here. I'll, I'll stick with ferco on 1 on tariffs. Uh, you know, maybe Pete to expand. You mentioned an a, a, a larger pet and maybe possibly PET. CT. Um, backlog maybe, you know how much of that is being driven by fercho?
I'll take that for condo piece and then maybe Jay you can you can touch on the second part on the on the tariffs I think look without adding any more pet systems.
I mentioned this prior is that if we were to just take 25% of the current pet myocardial perfusion market just 25% of it that's roughly a $1 billion out for Colorado revenue year without one other scanner and those are already in cardiology.
To your other point, though we are seeing the amount of pet systems, increasing out some of that is in cardiology for sure but some of it's also in.
Peter Arduini: Thanks, Anthony. I'll take the Florcato piece and then maybe Jay, you can touch on the second part on the tariffs. I think, look, without adding any more PET systems, and I think I mentioned this prior, is that if we were to just take 25% of the current PET myocardial perfusion market, just 25% of it, that's roughly $1 billion of Florcato revenue without one other scanner added. Those are already in cardiology. To your other point, we are seeing the amount of PET systems increasing now. Some of that is in cardiology for sure, but some of it's also across the board in oncology because of the new molecules that are coming up, some of the new diagnostics capabilities that we actually have as well. We are seeing both of those.
Uh does the existing install base within G of PET? CT systems, does that support this getting to a billion dollars or do you need some of that on the capital side to be released in, in order to sort of, you know, let ferco flourish here a little bit and then quickly on tariffs, it it stood at a, a net, uh, negative 455% headwind for this year. You know, all else equal the company was talking about mitigation efforts into 26. How much of the negative -45 can be offset into 2026? Thanks.
Across the board in oncology because of the new molecules that are coming up some of the new diagnostics capabilities that we actually have as well. So we're seeing both of those but I think to your point, it's super important to understand just with a quarter of the conversion of the pet MPI today away from rubidium supercargo that gets you to one <unk>.
Which again why it's so important that you manage the ramp appropriate and customers have a world class experience when they do have the ability to convert a higher percentage of their patients over can happen rather quickly.
Thank you. I'll, I'll take the FICO piece and then maybe Jay. You can you can touch on the second part on the, on the tariffs. I I think look without adding any more pet systems and I think I mentioned this prior, is that if we were to just take 25% of the current pet myocardial perfusion Market, just 25% of it, that's roughly a billion dollars of forcado Revenue here, without 1 other scanner at it and those are already incredible.
Cardiology.
But you are not sure exactly all tariffs overall.
As you noted were $265 million in tariff impact this year, we expect less than that next year.
Peter Arduini: I think to your point, it's super important to understand just with a quarter of the conversion of the PET MPI today away from Rubidium to Florcato, that gets you to $1 billion, which again is why it's so important that you manage the ramp appropriately and customers have a world-class experience when they do. The ability to convert a higher percentage of their patients over can happen rather quickly.
We're going through our planning processes right now to get the fine tuned to answer in terms of what the impact will be but it's safe to say it will be a tailwind. We're looking at things like structural changes to supply chain continuing to work on U S. MCA certification using free trade zones, and then of course, some selective pricing, but working together.
We expect tariffs to be a tailwind next year to earnings growth.
Jay Saccaro: Sure, quickly on tariffs. Overall, as you noted, we're $265 million in tariff impact this year. We expect less than that next year. We're going through our planning processes right now to get the fine-tuned answer in terms of what the impact will be, but it's safe to say it will be a tailwind. We're looking at things like structural changes to supply chain, continuing to work on USMCA certification, using free trade zones, and then of course some selective pricing. Working together, we expect tariffs to be a tailwind next year to earnings growth.
To your other point though, we are seeing the amount of pet systems increasing. Now, some of that is in cardiology for sure, but some of it's also in uh, across the board in oncology because of the new molecules that are coming up some of the new Diagnostics capabilities that we actually have as well. So we're seeing both of those but I think to your point it's super important to understand just with a quarter of the conversion of the pet MPI today away from rubidium to forcado, I get you to a billion dollars which again why it's so important that you manage the ramp appropriate and customers have a world-class experience when they do the ability to convert a higher percentage of their patients, over can happen rather quickly.
Thanks.
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Thanks, everyone for joining today and we look forward to connecting with you those there'll be tending vrs or one of our upcoming conferences. Thank you.
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[Analyst 1]: Thanks.
What you? Yeah sure quickly on terrorists overall. As you as you noted were 265 million in tariff impact this year. Um we expect less than that next year. Um we're going through our planning processes right now to get the fine-tuned answer in terms of what the impact will be. But it's safe to say it will be a Tailwind. We're looking at things, like structural changes to supply chain, continuing to work on usmca certification, using free trade zones and then of course, some selective pricing. But working together, we expect tariffs to be a Tailwind. Uh, next year to earnings growth,
Operator: That concludes our Q&A session for today. Please proceed with any closing remarks.
And that concludes our Q&A session for today. Please proceed with any closing remarks.
Peter Arduini: Just thanks everyone for joining today, and we look forward to connecting with you, those who will be attending the RSNA or one of our upcoming conferences. Thank you.
Operator: This concludes our conference. Thank you for participating. You may now disconnect.
Thank you, everyone, for joining today. We look forward to connecting with you, especially those who will be attending the RSNA or one of our upcoming conferences. Thank you.
And this concludes our conference. Thank you for participating, and you may now disconnect.
[Analyst 4]: SA.