GE HealthCare Technologies Inc.
Analysis
GE HealthCare has booked the strongest order book in its history, but the machines behind it mostly will not turn into sales until 2027, and the cost of building them is landing now alongside a chip and freight price spike and a patient-monitoring business that lost money. How much of the $23.9 billion backlog is service work, not equipment?
- Demand is booked, but the money arrives later.
Orders rose 11% in Q2 FY2026 and backlog hit a record $23.9 billion, while revenue grew just 3.5%. Management says the new machines turn into sales mostly in 2027, so it pays for the launch a year before the sales arrive. When do photon counting CT orders start converting to sales?
- Chip and freight costs forced a guidance cut.
Q1 FY2026 management cut the full-year profit outlook, blaming about $250 million of new memory-chip, oil and freight costs, and took $0.15 off earnings per share. The price rises that cover them land later, so the squeeze lasts.
- Patient monitoring went from drag to possible sale.
PCS revenue fell 13.5% in Q2 FY2026 and the segment lost money. Management blamed an inability to ship rather than weak demand and has opened a review of the business, including a sale, so profit leans on the other two segments. How much of the PCS decline was supply issues versus lost demand?
- Order book and backlogOrders are growing faster than sales across imaging, ultrasound and radiopharmaceuticals, so growth depends on backlog conversion rather than on demand.
- New product cycleNewly cleared imaging and ultrasound products carry higher prices and lower manufacturing cost, which should lift both growth and gross margin as they scale.
- Contrast media supplyContrast media demand is running close to industry supply, giving the pharmaceutical diagnostics business volume and pricing support even as new generic competitors appear.
- Input cost inflationInflation in memory chips, oil and freight forced a cut to profit guidance, and the price and cost offsets arrive with a lag over the following quarters.
- Patient Care Solutions dragThe patient monitoring and anesthesia business is shrinking, losing money and short of components, and management is now reviewing whether to keep it at all.
- China market weaknessChina is still guided to decline as volume-based procurement expands, so the company's growth plan does not depend on any recovery in that market.
| Politician | Transaction | Amount | Traded | Filed |
|---|---|---|---|---|
Donald Trump Republican · Executive | Sale | ≥$15K | Aug 26 | Oct 8 |
Donald Trump Republican · Executive | Purchase | ≥$1K | Aug 17 | Oct 8 |
Donald Trump Republican · Executive | Sale | ≥$1K | Jul 27 | Sep 22 |
Donald Trump Republican · Executive | Sale | ≥$1K | Jul 24 | Sep 22 |
Donald Trump Republican · Executive | Purchase | ≥$1K | Jul 20 | Sep 22 |
Congressional trading data provided by QuiverQuant
How GE HealthCare Technologies turned $20.6B of revenue into $2.8B of operating income.
| Revenue | ||
|---|---|---|
| Imaging Segment | $9.2B | ▲ 4.40% YoY |
| PCS Segment | $3.1B | ▼ 1.25% YoY |
| PDx Segment | $2.9B | ▲ 15.63% YoY |
| Total revenue | $20.6B | |
| Gross profit | $8.2B | 40.0% |
| Operating income | $2.8B | 13.4% |