GE HealthCare boosts 2025 profit view after strong US demand helps third quarter

GE HealthCare Technologies (GEHC.O) exceeded third-quarter revenue and adjusted EPS estimates, driven by robust demand for medical devices in the U.S. and EMEA regions, leading the company to raise its annual adjusted profit forecast. Despite this positive performance, the company faced headwinds including a 3% decline in China sales due to anti-corruption crackdowns and economic delays, alongside a significant impact from tariffs. The updated 2025 adjusted profit forecast now stands at $4.51 to $4.63 per share, with the midpoint 4 cents higher than previous guidance.

Analysis

GE HealthCare Technologies (GEHC.O) reported robust third-quarter results, surpassing analyst estimates with total sales of $5.14 billion against a $5.08 billion forecast, and adjusted EPS of $1.07, exceeding the $1.05 estimate. This strong performance, primarily fueled by significant demand for medical devices across the United States and EMEA regions, prompted the company to raise its 2025 annual adjusted profit forecast to $4.51-$4.63 per share, with the midpoint now 4 cents higher than previous guidance. The imaging devices unit, GEHC's largest segment, demonstrated particular strength with a 5% revenue increase to $2.35 billion.

Despite the overall positive momentum, GEHC faced notable headwinds, including a 3% decline in China sales to $547 million, attributed to ongoing anti-corruption crackdowns and delays in economic stimulus within the healthcare sector. Furthermore, the company reiterated a substantial $265 million, or 45 cents per share, impact from tariffs, which now encompass 50% levies on India and specific tariffs on copper, steel, and aluminum derivatives, contributing to a 6-cent year-over-year decline in adjusted EPS.

The company's ability to raise its profit outlook amidst these tariff pressures and a challenging Chinese market underscores the resilience of its core business and strong demand in developed markets. This performance aligns with broader industry trends benefiting medical device makers from increased healthcare utilization, particularly among an aging population seeking surgical procedures and services.

Key Decisions for Investors

• Consider maintaining or initiating a long position given the raised guidance and strong demand in core markets, reflecting positive company fundamentals.
• Monitor GEHC's performance in China for signs of recovery or further deterioration, as this market remains a key area of uncertainty.
• Evaluate the ongoing impact of tariffs on future profitability and the company's strategies to mitigate these costs, which continue to be a notable headwind.