GE Healthcare Technologies Inc. (NASDAQ: GEHC), a leading player in the medical device and life sciences industry, reported its financial results for the first quarter of 2024, with China’s market dynamics being a significant factor in the company’s decision to adjust its annual guidance downward. The company cited the ongoing anti-corruption campaign and delays in government stimulus programs as key factors contributing to the downgrade.
Global revenues for GE reached $4.8 billion, marking a modest 1% increase year-on-year in organic terms. Product sales remained stable at $3.2 billion, while services saw a 2% rise to $1.6 billion. Business segment-wise, Imaging was flat at $2.6 billion, Ultrasound dipped 1% to $823 million, Patient Care Services (PCS) grew 1% to $772 million, and Pharmaceutical Diagnostics (PDx) soared 14% year-on-year to $639 million.
Despite the overall tepid growth, GE revised its full-year revenue outlook, forecasting a more conservative organic revenue growth of 1%-2%, down from the previous expectation of ‘approximately 4%’. This revision was largely attributed to a 18% reported sales decline in China to $583 million in Q1’24, and a 15% decrease over the first half of the year to $1.18 billion. Excluding China, GE’s global growth stood at 4% year-on-year.
GE’s statement highlighted the timing of a new government stimulus program announced in March 2024 and the lingering effects of the anti-corruption campaign initiated last year as local market negatives. The company anticipates that while the 2024 stimulus program will present long-term opportunities, it has created short-term uncertainty as provinces finalize their plans and customers await details before making purchasing decisions.
During the earnings call, CEO Peter Arduini expressed a cautious outlook for the China market for the remainder of the year, expecting a continued sales decline and negative growth for the year. The executives refrained from providing a definitive forecast for the China market in 2025, opting for a wait-and-see approach.
Last year, China accounted for approximately 14% of GE’s overall business, but the company now anticipates this share to contract to around 11%-12% for the current year. However, GE CFO Jay Saccaro expressed long-term optimism regarding China, citing the government’s focus on expanding healthcare access as a positive long-term driver for the company’s business in the country.- Flcube.com
