- COVID-19 impact: GE HealthCare’s revenue in the second quarter was relatively flat compared to the prior year’s quarter but was up by approximately $160 million versus the first quarter of 2022. Despite the quarterly improvement, GE’s health unit was still strained by supply chain challenges and COVID-19 lockdowns in China. CFO Carolina Dybeck Happe said during a Tuesday earnings call that GE expects supply chain pressures to improve in the second half of the year for the healthcare business.
- Hospital spending: The company noted in a second-quarter earnings report that it is closely monitoring hospital spending. CEO Larry Culp told investors that “post-pandemic spending by healthcare providers” will be critical going forward for the healthcare group. The comments come after Intuitive Surgical reported that hospitals have been tightening spending because of rising costs for labor and some supplies. The tighter budgets contributed to a drop in robotic system placements for Intuitive, a trend Intuitive CEO Gary Guthart said is likely to continue.
- Full-year forecast: GE revised its forecast for the healthcare group’s 2022 profit to approximately $3 billion, a drop from a range of $3 billion to $4 billion that was announced during a March investor day. Dybeck Happe said the lowered forecast is largely due to inflation pressures, assuring investors that “order demand remains solid.” While the forecast for 2022 profit was lowered, GE slightly increased its expectation for revenue growth. The company now forecasts mid-single-digit revenue growth for the full year compared to its prior guidance of low- to mid-single-digit growth.
- Spinoff: Culp said that GE is making improvements on the spinoff of the healthcare business, which is scheduled to take place in early 2023. The CEO said that GE has submitted its requests for a private letter ruling to the Internal Revenue Service and plans to submit shortly its confidential Form 10 to the Securities and Exchange Commission. GE announced in November that it will be turn its healthcare unit into an independent business as part of a larger plan to separate GE into three companies.
GE expects supply chain issues to ease in second half after Q2 challenges for health unit
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