GE has reported 7% organic sales growth at its healthcare unit in the first quarter, with health systems and pharmaceutical diagnostics contributing evenly to the growth.
The company's results reflect the return of elective procedures to pre-pandemic levels, which other top medtechs have also reported, and demand for ultrasound bookings. GE saw growth across most regions and all product lines.
Orders grew 5% organically as the softening of COVID-19-related demand was offset by the resumption of cardiac, oncology and neurology screening as the crisis eased in key markets.
The first-quarter results arrive weeks after GE Healthcare shared its outlook for 2021 at an investor event. At that time, GE told investors to expect low single-digit to mid-single-digit healthcare revenue growth. In 2020, GE's healthcare sales rose 4% as demand for ventilators helped it recover quickly from the industry-wide slump in elective procedures due to growing COVID-19 cases and hospitalizations.
Since the GE event, the first batch of medtech quarterly financial reports of the year have indicated a recovery in the volume of elective procedures. Philips said volumes in March topped pre-pandemic levels, confirming encouraging signs in first-quarter results issued by Edwards Lifesciences, Intuitive Surgical and Johnson & Johnson.
The GE results provide further evidence that the resumption of elective procedures has driven up demand for imaging and other healthcare products and services.
"For the third consecutive quarter global procedures volumes were up double-digit. Demand for non-pandemic products was solid as government stimulus drove strong order growth in China, India and Japan," Carolina Dybeck Happe, chief financial officer at GE, told investors on a first-quarter earnings call.
While Happe said many GE customers are still running at reduced capacity and patients are waiting longer than usual for screening and procedures, the first quarter order book points to efforts to get healthcare back to normal. GE attributed the 7% rise in pharmaceutical diagnostics orders to the return of routine oncology and neurology screening, plus CT screening for cardiac disease, to pre-pandemic levels.
Healthcare systems benefited from the rising demand for imaging, too. Orders rose 5% on the strength of double-digit increases in imaging and ultrasound bookings, supported by growth across GE's other equipment and services. Pharmaceutical diagnostics and healthcare systems each grew sales by 7% organically in the first quarter.
GE's life care solutions group dragged on the total healthcare order growth as demand related to the pandemic softened. The first quarter of 2020 saw a surge in orders related to COVID-19, creating a tough comparison.
While GE said the pharmaceutical diagnostics unit has now "largely recovered" to pre-pandemic levels, the company expects "capital expenditures to remain under pressure from revenue declines related to COVID-19 impacts."