Increased orders of imaging and ultrasound equipment drove revenue growth in GE HealthCare in the third quarter. Equipment sales increased 8% to $2.35 billion in the period, while services revenue advanced 5% to $2.26 billion.
GE HealthCare CEO Peter Arduini said the results reflect the company’s work to address supply chain constraints and improve product fulfillment, including the recent agreement with a Chilean mining firm to secure a regular supply of iodine to manufacture contrast media for imaging.
“While challenging, we expect supply chain pressures to improve for the remainder of ‘22 and into ‘23,” Arduini said on a conference call today.
Spinoff on track:
GE said the health care unit remains on track to be spun off from parent General Electric in the first week of January. The company recently filed a Form 10 registration statement for the unit, named its board of directors and announced an investor day for Dec. 8.
The spinoff is expected to save the parent company $450 million a year, while incurring a $700 million cost, most of which is expected in the fourth quarter.
Hospital demand: Arduini addressed investor concerns about hospital demand for equipment, acknowledging that his customers have been affected by higher costs, particularly wages. Still, patient demand is pushing providers to continue investing in GE’s products and services, he added.
“Obviously there have been some increases in the cost of labor, but that seems to be subsiding,” Arduini said. “We still see a reasonable amount of pent-up demand within the system.”
He added that global healthcare spending is solid, particularly in Europe and Asia, while U.S. customers are more cautious as they monitor the economic environment.
Forecast: GE HealthCare expects mid-single-digit revenue growth for fiscal year 2022 and forecasts operating profit of at least $2.6 billion, including the effect of inflation, foreign-exchange rates and investments.
Shares of General Electric fell $1.32, or 1.8%, to $72.04 in early trading on Tuesday.