Delivers Strong Financial and Operating
Performance in First Year as Public Company
Fourth Quarter 2023
- Revenue growth was 5% year-over-year; Organic revenue growth*
of 5%
- Net income margin was 7.7% versus 11.2% for the prior year;
Adjusted Earnings Before Interest and Taxes (EBIT) margin* was
16.1% versus the fourth quarter of 2022 Standalone Adjusted EBIT
margin* of 16.1%
- Cash flow from operating activities was $1.1 billion versus
$1.1 billion for the prior year; Free cash flow* was $956 million
versus $987 million; repaid $850 million of debt in the fourth
quarter of 2023 and an additional $150 million of debt in January
2024
Full Year 2023
- Revenue growth was 7% year-over-year; Organic revenue growth*
of 8%
- Net income margin was 8% versus 10.4% for the prior year;
Adjusted EBIT margin* was 15.1% versus 2022 Standalone Adjusted
EBIT margin* of 14.5%
- Cash flow from operating activities was $2.1 billion versus
$2.1 billion for the prior year, and Free cash flow* was $1.7
billion versus $1.8 billion last year, due to standalone interest
and postretirement benefit payments
- Company provides 2024 financial guidance, demonstrating
progress toward medium-term financial targets
Insertion of Fourth Quarter 2023 P&L labeled "Consolidated
and Combined Statements of Income" following the 2024 Guidance
information.
The updated release reads:
GE HEALTHCARE REPORTS FOURTH QUARTER AND
FULL YEAR 2023 FINANCIAL RESULTS
Delivers Strong Financial and Operating
Performance in First Year as Public Company
Fourth Quarter 2023
- Revenue growth was 5% year-over-year; Organic revenue growth*
of 5%
- Net income margin was 7.7% versus 11.2% for the prior year;
Adjusted Earnings Before Interest and Taxes (EBIT) margin* was
16.1% versus the fourth quarter of 2022 Standalone Adjusted EBIT
margin* of 16.1%
- Cash flow from operating activities was $1.1 billion versus
$1.1 billion for the prior year; Free cash flow* was $956 million
versus $987 million; repaid $850 million of debt in the fourth
quarter of 2023 and an additional $150 million of debt in January
2024
Full Year 2023
- Revenue growth was 7% year-over-year; Organic revenue growth*
of 8%
- Net income margin was 8% versus 10.4% for the prior year;
Adjusted EBIT margin* was 15.1% versus 2022 Standalone Adjusted
EBIT margin* of 14.5%
- Cash flow from operating activities was $2.1 billion versus
$2.1 billion for the prior year, and Free cash flow* was $1.7
billion versus $1.8 billion last year, due to standalone interest
and postretirement benefit payments
- Company provides 2024 financial guidance, demonstrating
progress toward medium-term financial targets
GE HealthCare (Nasdaq: GEHC), a leading global precision care
innovator, today reported financial results for the fourth quarter
ended December 31, 2023.
GE HealthCare President and CEO Peter Arduini said, “After our
first year as a publicly traded company, I’m pleased to announce
robust fourth quarter and full year results. This strong financial
performance is a testament to our dedicated team and successful
execution of our precision care strategy. We’ve made significant
strides, including investing over $1 billion in R&D for future
growth, helping drive more than 40 innovations in 2023. We
bolstered our market position with strategic acquisitions, while at
the same time paying down $1 billion in debt, setting a solid
foundation for continued growth. We’re confident heading into 2024
amid the backdrop of an improved capital equipment landscape.”
Fourth Quarter 2023 Total Company Financial
Performance
- Revenues of $5.2 billion increased 5% on both a reported and
Organic* basis year-over-year, driven by price and volume.
- Total company book-to-bill was strong at 1.05 times, defined as
Total orders divided by Total revenues, as the Company continues to
build a robust backlog. Total company orders increased 3%
organically year-over-year.
- Net income attributable to GE HealthCare was $403 million
versus $554 million for the prior year, and Adjusted EBIT* was $837
million versus $844 million.
- Net income margin was 7.7% versus 11.2% for the prior year,
down 350 basis points (bps) primarily impacted by standalone
interest expense. Adjusted EBIT margin* was 16.1% versus 17.1%,
down 100 bps. Adjusted EBIT margin* for the fourth quarter of 2023
was flat versus the Company’s estimated fourth quarter 2022
Standalone Adjusted EBIT margin* of 16.1% as benefits from
productivity and price were offset primarily by investments.
- Earnings per share (EPS) from continuing operations were $0.88
versus $1.21, down $0.33 from the prior year. Adjusted EPS* was
$1.18 versus $1.31, down $0.13 from the prior year. Both
comparisons were impacted by standalone interest expense. Adjusted
EPS* for the fourth quarter of 2023 grew $0.12 versus the Company’s
estimated fourth quarter 2022 Standalone Adjusted EPS* of
$1.06.
- Cash flow from operating activities was $1.1 billion, down $13
million year-over-year. Free cash flow* was $956 million, down $31
million year-over-year. Both metrics were primarily impacted by
standalone interest and postretirement benefit payments. The
Company repaid $850 million of debt in the fourth quarter of 2023
and an additional $150 million of debt in January 2024.
Fourth Quarter 2023 Segment Financial Performance
Imaging
- Revenues of $2.8 billion increased 4% on both a reported and
Organic* basis year-over-year.
- Segment EBIT was $337 million versus $321 million for the prior
year.
- Segment EBIT margin was 11.9% versus 11.8% for the prior
year.
Ultrasound
- Revenues of $944 million declined 1% reported and 2% on an
Organic* basis year-over-year.
- Segment EBIT was $244 million versus $285 million for the prior
year.
- Segment EBIT margin was 25.8% versus 29.8% for prior year.
Patient Care Solutions
- Revenues of $827 million increased 5% reported and 4% on an
Organic* basis year-over-year.
- Segment EBIT was $110 million versus $130 million for the prior
year.
- Segment EBIT margin was 13.3% versus 16.5% for the prior
year.
Pharmaceutical Diagnostics
- Revenues of $591 million increased 25% reported and 23% on an
Organic* basis year-over-year.
- Segment EBIT was $144 million versus $109 million for the prior
year.
- Segment EBIT margin was 24.4% versus 23.0% for the prior
year.
Full Year 2023 Total Company Financial Performance
- Revenues of $19.6 billion increased 7% year-over-year and 8% on
an Organic* basis with growth across all segments and regions.
- Total company book-to-bill was 1.03 times, as orders dollars
outpaced revenues. Total company orders increased 3% organically
year-over-year.
- Net income attributable to GE HealthCare was $1.6 billion
versus $1.9 billion for the prior year, and Adjusted EBIT* was $3.0
billion versus $2.9 billion in the same period last year.
- Net income margin was 8% versus 10.4% for the prior year, down
240 bps, primarily impacted by standalone interest expense.
Adjusted EBIT margin* was 15.1% versus 15.6% last year, down 50
bps. Adjusted EBIT margin* for the full year 2023 was up 60 bps
versus the Company’s estimated full year 2022 Standalone Adjusted
EBIT margin* of 14.5% last year. Margin benefited from
productivity, price, and volume, and was partially offset by
inflation.
- EPS from continuing operations was $3.04 compared to $4.18 for
full year 2022, down $1.14 from the prior year. Adjusted EPS* was
$3.93, versus $4.63 in prior year. Both comparisons were impacted
by standalone interest expense. Adjusted EPS* for the full year
2023 grew $0.55 versus the Company’s estimated full year 2022
Standalone Adjusted EPS* of $3.38.
- Cash flow from operating activities was $2.1 billion, down $33
million year-over-year, and Free cash flow* was $1.7 billion, down
$113 million year-over-year, due to standalone interest and
postretirement benefit payments.
- Cash flow conversion, defined as cash from operating activities
divided by net income attributable to GE HealthCare, was 134% while
Free cash flow conversion* was 95% for 2023.
Growth and Innovation
- GE HealthCare Announces Agreement to Acquire MIM Software
- GE HealthCare Unveils SIGNA Champion, a 1.5T Wide Bore MRI
System Powered by Artificial Intelligence (AI) for High Performance
and Patient Comfort
- GE HealthCare Participates in Project to Pioneer AI-Screening
Platform for Early Detection of Alzheimer’s Disease
- GE HealthCare Announces New Version of Digital Expert Access,
the First FDA 510(k)-Cleared Device to Enable Remote Patient
Scanning, and Exclusive Distribution Agreement with IONIC
Health
- University of Wisconsin–Madison and GE HealthCare Broaden
Shared Commitment to Healthcare Innovation
- Expanding the Reach of Care for Cancer and Other Disease
States: BAMF Health and GE HealthCare collaborate to enable
sustainable and scalable solutions for growth in Theranostics
- GE HealthCare Announces New Data Validating AI Models for
Predicting Patient Response to Immunotherapies
- GE HealthCare Tops List with Highest Number of AI-Enabled
Medical Device Authorizations, Developing Innovative Solutions for
Precision Care
2024 Guidance
Full year 2024 guidance is as follows:
- Organic revenue growth* of approximately 4%
year-over-year.
- Adjusted EBIT margin* in the range of 15.6% to 15.9%,
reflecting an expansion of 50 to 80 basis points versus 2023
Adjusted EBIT margin* of 15.1%.
- Adjusted effective tax rate (ETR)* in the range of 23% to
25%.
- Adjusted EPS* in the range of $4.20 to $4.35, representing 7%
to 11% growth versus Adjusted EPS* of $3.93 for 2023.
- Free cash flow* of approximately $1.8 billion.
The Company provides its outlook on a non-GAAP basis. Refer to
the Non-GAAP Financial Measures in Outlook section below for more
details.
Consolidated and Combined Statements of
Income
Unaudited
For the three months ended
December 31
For the years ended December
31
(In millions, except per share
amounts)
2023
2022
2023
2022
Sales of products
$
3,597
$
3,342
$
13,127
$
12,044
Sales of services
1,609
1,596
6,425
6,297
Total revenues
5,206
4,938
19,552
18,341
Cost of products
2,268
2,150
8,465
7,975
Cost of services
782
856
3,165
3,187
Gross profit
2,156
1,932
7,922
7,179
Selling, general, and administrative
1,152
884
4,282
3,631
Research and development
315
271
1,205
1,026
Total operating expenses
1,467
1,155
5,487
4,657
Operating income
689
777
2,435
2,522
Interest and other financial charges –
net
131
59
542
77
Non-operating benefit (income) costs
(50
)
(1
)
(382
)
(5
)
Other (income) expense – net
(1
)
1
(86
)
(62
)
Income from continuing operations
before income taxes
609
718
2,361
2,512
Benefit (provision) for income taxes
(193
)
(151
)
(743
)
(563
)
Net income from continuing
operations
416
567
1,618
1,949
Income (loss) from discontinued
operations, net of taxes
—
6
(4
)
18
Net income
416
573
1,614
1,967
Net (income) loss attributable to
noncontrolling interests
(13
)
(19
)
(46
)
(51
)
Net income attributable to GE
HealthCare
403
554
1,568
1,916
Deemed preferred stock dividend of
redeemable noncontrolling interest
—
—
(183
)
—
Net income attributable to GE
HealthCare common stockholders
$
403
$
554
$
1,385
$
1,916
Earnings per share from continuing
operations attributable to GE HealthCare common
stockholders:
Basic
$
0.89
$
1.21
$
3.06
$
4.18
Diluted
0.88
1.21
3.04
4.18
Earnings per share attributable to GE
HealthCare common stockholders:
Basic
$
0.89
$
1.22
$
3.05
$
4.22
Diluted
0.88
1.22
3.03
4.22
Weighted-average number of shares
outstanding:
Basic
455
454
455
454
Diluted
458
454
458
454
Consolidated and Combined Statements of
Income
For the years ended December
31
(In millions, except per share
amounts)
2023
2022
2021
Sales of products
$
13,127
$
12,044
$
11,165
Sales of services
6,425
6,297
6,420
Total revenues
19,552
18,341
17,585
Cost of products
8,465
7,975
7,196
Cost of services
3,165
3,187
3,215
Gross profit
7,922
7,179
7,174
Selling, general, and administrative
4,282
3,631
3,563
Research and development
1,205
1,026
816
Total operating expenses
5,487
4,657
4,379
Operating income
2,435
2,522
2,795
Interest and other financial charges –
net
542
77
40
Non-operating benefit (income) costs
(382
)
(5
)
3
Other (income) expense – net
(86
)
(62
)
(123
)
Income from continuing operations
before income taxes
2,361
2,512
2,875
Benefit (provision) for income taxes
(743
)
(563
)
(600
)
Net income from continuing
operations
1,618
1,949
2,275
Income (loss) from discontinued
operations, net of taxes
(4
)
18
18
Net income
1,614
1,967
2,293
Net (income) loss attributable to
noncontrolling interests
(46
)
(51
)
(46
)
Net income attributable to GE
HealthCare
1,568
1,916
2,247
Deemed preferred stock dividend of
redeemable noncontrolling interest
(183
)
—
—
Net income attributable to GE
HealthCare common stockholders
$
1,385
$
1,916
$
2,247
Earnings per share from continuing
operations attributable to GE HealthCare common
stockholders:
Basic
$
3.06
$
4.18
$
4.91
Diluted
3.04
4.18
4.91
Earnings per share attributable to GE
HealthCare common stockholders:
Basic
$
3.05
$
4.22
$
4.95
Diluted
3.03
4.22
4.95
Weighted-average number of shares
outstanding:
Basic
455
454
454
Diluted
458
454
454
Consolidated and Combined Statements of
Financial Position
As of
(In millions, except share and per
share amounts)
December 31, 2023
December 31, 2022
Cash, cash equivalents, and restricted
cash
$
2,504
$
1,445
Receivables – net of allowances of $98 and
$91
3,525
3,295
Due from related parties
32
17
Inventories
1,960
2,155
Contract and other deferred assets
1,000
989
All other current assets
389
417
Current assets
9,410
8,318
Property, plant, and equipment – net
2,500
2,314
Goodwill
12,936
12,813
Other intangible assets – net
1,253
1,520
Deferred income taxes
4,474
1,550
All other assets
1,881
1,024
Total assets
$
32,454
$
27,539
Short-term borrowings
$
1,006
$
15
Accounts payable
2,947
2,944
Due to related parties
99
146
Contract liabilities
1,918
1,896
All other current liabilities
3,011
2,190
Current liabilities
8,981
7,191
Long-term borrowings
8,436
8,234
Compensation and benefits
5,782
549
Deferred income taxes
68
370
All other liabilities
1,877
1,603
Total liabilities
25,144
17,947
Commitments and contingencies
Redeemable noncontrolling
interests
165
230
Common stock, par value $0.01 per share,
1,000,000,000 shares authorized, 455,342,290 shares issued and
outstanding as of December 31, 2023; 100 shares issued and
outstanding as of December 31, 2022
5
—
Additional paid-in capital
6,493
—
Retained earnings
1,326
—
Net parent investment
—
11,235
Accumulated other comprehensive income
(loss) – net
(691
)
(1,878
)
Total equity attributable to GE
HealthCare
7,133
9,357
Noncontrolling interests
12
5
Total equity
7,145
9,362
Total liabilities, redeemable
noncontrolling interests, and equity
$
32,454
$
27,539
Consolidated and Combined Statements of
Cash Flows
For the years ended December
31
(In millions)
2023
2022
2021
Net income
$
1,614
$
1,967
$
2,293
Less: Income (loss) from discontinued
operations, net of taxes
(4
)
18
18
Net income from continuing
operations
$
1,618
$
1,949
$
2,275
Adjustments to reconcile Net income from
continuing operations to Cash from (used for) operating
activities
Depreciation of property, plant, and
equipment
248
228
225
Amortization of intangible assets
362
405
400
Gain on fair value remeasurement of
contingent consideration
(17
)
(65
)
—
Net periodic postretirement benefit plan
(income) expense
(332
)
9
25
Postretirement plan contributions
(357
)
(18
)
(20
)
Share-based compensation
114
67
76
Provision for income taxes
743
563
600
Cash paid during the year for income
taxes
(474
)
(851
)
(615
)
Changes in operating assets and
liabilities, excluding the effects of acquisitions and
dispositions:
Receivables
(185
)
(231
)
(1,336
)
Due from related parties
4
13
157
Inventories
111
(402
)
(435
)
Contract and other deferred assets
10
(222
)
23
Accounts payable
(13
)
481
263
Due to related parties
(84
)
(33
)
(21
)
Contract liabilities
26
138
(21
)
All other operating activities
327
103
11
Cash from (used for) operating
activities – continuing operations
2,101
2,134
1,607
Cash flows – investing
activities
Additions to property, plant and equipment
and internal-use software
(387
)
(310
)
(248
)
Dispositions of property, plant, and
equipment
1
4
15
Purchases of businesses, net of cash
acquired
(147
)
—
(1,481
)
All other investing activities
(25
)
(92
)
(47
)
Cash from (used for) investing
activities – continuing operations
(558
)
(398
)
(1,761
)
Cash flows – financing
activities
Net increase (decrease) in borrowings
(maturities of 90 days or less)
(12
)
9
(7
)
Newly issued debt, net of debt issuance
costs (maturities longer than 90 days)
2,006
8,198
5
Repayments and other reductions
(maturities longer than 90 days)
(855
)
(3
)
(10
)
Dividends paid to stockholders
(41
)
—
—
Redemption of noncontrolling interests
(211
)
—
—
Net transfers (to) from GE
(1,317
)
(8,934
)
(238
)
All other financing activities
(48
)
(92
)
(13
)
Cash from (used for) financing
activities – continuing operations
(478
)
(822
)
(263
)
Cash from (used for) operating activities
– discontinued operations
—
(21
)
—
Effect of foreign currency rate changes on
cash, cash equivalents, and restricted cash
(10
)
(3
)
(34
)
Increase (decrease) in cash, cash
equivalents, and restricted cash
1,055
890
(451
)
Cash, cash equivalents, and restricted
cash at beginning of year
1,451
561
1,012
Cash, cash equivalents, and restricted
cash as of December 31
$
2,506
$
1,451
$
561
Supplemental disclosure of cash flows
information
Cash paid during the year for interest
$
(570
)
$
—
$
(21
)
Non-cash investing activities
Acquired but unpaid property, plant, and
equipment
$
140
$
136
$
93
Non-GAAP Financial Measures
The non-GAAP financial measures presented in this press release
are supplemental measures of GE HealthCare’s performance and its
liquidity that the Company believes will help investors understand
its financial condition, cash flows, and operating results and
assess its future prospects. The Company believes that presenting
these non-GAAP financial measures, in addition to the corresponding
U.S. GAAP financial measures, are important supplemental measures
that exclude non-cash or other items that may not be indicative of
or related to its core operating results and the overall health of
the Company. The Company believes these non-GAAP financial measures
provide investors greater transparency to the information used by
management for its operational decision-making and allow investors
to see results “through the eyes of management.” The Company
believes that providing this information assists investors in
understanding its operating performance and the methodology used by
management to evaluate and measure such performance. When read in
conjunction with the Company’s U.S. GAAP results, these non-GAAP
financial measures provide a baseline for analyzing trends in the
Company’s underlying businesses and can be used by management as
one basis for making financial, operational, and planning
decisions. Finally, these measures are often used by analysts and
other interested parties to evaluate companies in the Company’s
industry.
Management recognizes that these non-GAAP financial measures
have limitations, including that they may be calculated differently
by other companies or may be used under different circumstances or
for different purposes, thereby affecting their comparability from
company to company. In order to compensate for these and the other
limitations, management does not consider these measures in
isolation from or as alternatives to the comparable financial
measures determined in accordance with U.S. GAAP. Readers should
review the reconciliations and should not rely on any single
financial measure to evaluate the Company’s business.
The Company defines these non-GAAP financial measures as:
- Organic revenue: Total revenues excluding the effects of: (1)
net sales from recent acquisitions and dispositions with less than
a full year of comparable net sales; and (2) foreign currency
exchange rate fluctuations in order to present revenue on a
constant currency basis.
- Organic revenue growth rate: Rate of change when comparing
Organic revenue, period over period.
- Adjusted EBIT: Net income attributable to GE HealthCare
excluding the effects of: (1) Interest and other financial charges
– net; (2) Non-operating benefit (income) costs; (3) Provision
(benefit) for income taxes; (4) Income (loss) from discontinued
operations, net of taxes; (5) Net (income) loss attributable to
noncontrolling interests; (6) restructuring costs; (7) acquisition
and disposition-related charges (benefits); (8) Spin-Off and
separation costs; (9) (gain) loss on business and asset
dispositions; (10) amortization of acquisition-related intangible
assets; and (11) investment revaluation (gain) loss. In addition,
the Company may from time to time consider excluding other
nonrecurring items to enhance comparability between periods.
- Adjusted EBIT margin: Adjusted EBIT divided by Total revenues
for the same period.
- Standalone Adjusted EBIT: Adjusted EBIT including the effects
of recurring and on-going costs to operate new functions required
for a standalone company that management believes provide a better
depiction of the operations of GE HealthCare as a standalone
company.
- Standalone Adjusted EBIT margin: Standalone Adjusted EBIT
divided by Total revenues for the same period.
The Company believes that Organic revenue and Organic revenue
growth rate, by excluding the effect of acquisitions, dispositions,
and foreign currency rate fluctuations, provide management and
investors with additional understanding of the Company’s core,
top-line operating results and greater visibility into underlying
revenue trends of its established, ongoing operations. Organic
revenue and Organic revenue growth rate also provide greater
insight regarding the overall demand for its products and
services.
The Company believes Adjusted EBIT, Adjusted EBIT margin,
Standalone Adjusted EBIT, and Standalone Adjusted EBIT margin
provide management and investors with additional understanding of
its business by highlighting the results from ongoing operations
and the underlying profitability factors. These metrics exclude
interest expense, interest income, non-operating benefit (income)
costs, and tax expense, as well as non-recurring and/or non-cash
items, which may have a material impact on the Company’s results.
The Company believes this provides additional insight into how its
businesses are performing, on a normalized basis. However, these
non-GAAP financial measures should not be construed as inferring
that the Company’s future results will be unaffected by the items
for which the measure adjusts.
- Adjusted net income: Net income attributable to GE HealthCare
excluding (1) Non-operating benefit (income) costs; (2)
restructuring costs; (3) acquisition and disposition-related
charges (benefits); (4) Spin-Off and separation costs; (5) (gain)
loss on business and asset dispositions; (6) amortization of
acquisition-related intangible assets; (7) investment revaluation
(gain) loss; (8) tax effect of reconciling items (items 1-7); (9)
certain tax adjustments as described in Adjusted tax expense
definition below and (10) Income (loss) from discontinued
operations, net of taxes. In addition, the Company may from time to
time consider disclosing other nonrecurring items to enhance
comparability between periods.
- Adjusted EPS: Diluted earnings per share from continuing
operations excluding the per share impact of: (1) deemed preferred
stock dividend of redeemable noncontrolling interest, (2)
Non-operating benefit (income) costs; (3) restructuring costs; (4)
acquisition and disposition-related charges (benefits); (5)
Spin-Off and separation costs; (6) (gain) loss on business and
asset dispositions; (7) amortization of acquisition-related
intangible assets; (8) investment revaluation (gain) loss; (9) tax
effect of reconciling items (items 1-8); and (10) certain tax
adjustments as described in Adjusted tax expense definition below.
In addition, the Company may from time to time consider disclosing
other nonrecurring items to enhance comparability between
periods.
- Standalone Adjusted EPS: Adjusted EPS including the per share
impact of the effects of recurring and on-going costs to operate
new functions required for a standalone company and interest
expense associated with third party debt that management believes
provide a better depiction of the operations of GE HealthCare as a
standalone company.
The Company believes Adjusted net income, Adjusted EPS, and
Standalone Adjusted EPS provide investors with improved
comparability of underlying operating results and a further
understanding and additional transparency regarding how it
evaluates the business. These non-GAAP financial measures also
provide management and investors with additional perspective
regarding the impact of certain significant items on the Company’s
consolidated and combined earnings. However, they should not be
construed as inferring that the Company’s future results will be
unaffected by the items for which the measure adjusts.
- Adjusted tax expense and Adjusted ETR: Adjusted tax expense is
Income tax expense less the income tax related to pre-tax income
adjustments above and certain income tax adjustments. Examples of
certain income tax adjustments include the accrual of a deferred
tax liability on the prior period earnings of certain of the
Company’s foreign subsidiaries for which the Company is no longer
permanently reinvested. Adjusted ETR is Adjusted tax expense
divided by Income before income taxes less pre-tax income
adjustments above. Adjusted tax expense and Adjusted ETR can be
used by investors to review the income tax expense and effective
tax rate for the Company’s operations on a consistent basis.
- Free cash flow: Cash from (used for) operating activities -
continuing operations adjusting for the effects of (1) additions to
property, plant and equipment (PP&E) and internal-use software;
(2) dispositions of PP&E; and (3) impact of factoring
programs.
- Free cash flow conversion: Free cash flow divided by Adjusted
net income.
The Company believes that Free cash flow and Free cash flow
conversion provide management and investors with important measures
of the Company’s ability to generate cash on a normalized basis.
These metrics also provide insight into the Company’s flexibility
to allocate capital, including reinvesting in the Company for
future growth, paying down debt, paying dividends, and pursuing
other opportunities that may enhance stockholder value. The Company
believes investors may find it useful to compare Free cash flow
performance without the effects of the factoring program
discontinuation. However, they should not be construed as inferring
that the Company’s future results will be unaffected by the items
for which the measure adjusts.
Organic Revenue*
Unaudited
For the three months ended
December 31
For the years ended December
31
($ In millions)
2023
2022
% change
2023
2022
% change
Imaging revenues
$
2,830
$
2,709
4
%
$
10,581
$
9,985
6
%
Less: Acquisitions(1)
1
—
1
—
Less: Dispositions(2)
—
—
—
—
Less: Foreign currency exchange
15
—
(144
)
—
Imaging Organic revenue*
$
2,814
$
2,709
4
%
$
10,724
$
9,985
7
%
Ultrasound revenues
$
944
$
956
(1
)%
$
3,457
$
3,422
1
%
Less: Acquisitions(1)
—
—
—
—
Less: Dispositions(2)
—
—
—
—
Less: Foreign currency exchange
11
—
(43
)
—
Ultrasound Organic revenue*
$
933
$
956
(2
)%
$
3,500
$
3,422
2
%
PCS revenues
$
827
$
786
5
%
$
3,142
$
2,916
8
%
Less: Acquisitions(1)
—
—
—
—
Less: Dispositions(2)
—
—
—
—
Less: Foreign currency exchange
6
—
(16
)
—
PCS Organic revenue*
$
821
$
786
4
%
$
3,158
$
2,916
8
%
PDx revenues
$
591
$
473
25
%
$
2,306
$
1,958
18
%
Less: Acquisitions(1)
—
—
—
—
Less: Dispositions(2)
—
—
—
—
Less: Foreign currency exchange
9
—
(14
)
—
PDx Organic revenue*
$
582
$
473
23
%
$
2,320
$
1,958
18
%
Other revenues
$
14
$
14
—
%
$
66
$
60
10
%
Less: Acquisitions(1)
—
—
—
—
Less: Dispositions(2)
—
—
—
—
Less: Foreign currency exchange
1
—
1
—
Other Organic revenue*
$
13
$
14
(7
)%
$
65
$
60
8
%
Total revenues
$
5,206
$
4,938
5
%
$
19,552
$
18,341
7
%
Less: Acquisitions(1)
1
—
1
—
Less: Dispositions(2)
—
—
—
—
Less: Foreign currency exchange
42
—
(216
)
—
Organic revenue*
$
5,163
$
4,938
5
%
$
19,767
$
18,341
8
%
(1)
Represents revenues attributable to
acquisitions from the date the Company completed the transaction
through the end of four quarters following the transaction.
(2)
Represents revenues attributable to
dispositions for the four quarters preceding the disposition
date.
Unaudited Net Income to Adjusted EBIT*
and Standalone Adjusted EBIT* (estimated)
For the three months ended
December 31
For the years ended December
31
($ In millions)
2023
2022
% change
2023
2022
% change
Net income attributable to GE
HealthCare
$
403
$
554
(27
)%
$
1,568
$
1,916
(18
)%
Add: Interest and other financial charges
- net
131
59
542
77
Add: Non-operating benefit (income)
costs
(50
)
(1
)
(382
)
(5
)
Less: Benefit (provision) for income
taxes
(193
)
(151
)
(743
)
(563
)
Less: Income (loss) from discontinued
operations, net of taxes
—
6
(4
)
18
Less: Net (income) loss attributable to
noncontrolling interests
(13
)
(19
)
(46
)
(51
)
EBIT*
$
690
$
776
(11
)%
$
2,521
$
2,584
(2
)%
Add: Restructuring costs(1)
20
36
54
146
Add: Acquisition and disposition-related
charges (benefits)(2)
—
(14
)
(15
)
(34
)
Add: Spin-Off and separation costs(3)
95
7
270
14
Add: (Gain) loss on business and asset
dispositions(4)
—
—
—
(1
)
Add: Amortization of acquisition-related
intangible assets
32
31
127
121
Add: Investment revaluation (gain)
loss(5)
—
8
(1
)
31
Adjusted EBIT*
$
837
$
844
(1
)%
$
2,956
$
2,861
3
%
Less: Estimated standalone costs(6)
—
50
—
200
Less: Estimated incremental interest
expense(7)
—
—
—
—
Less: Estimated tax effect of reconciling
items(8)
—
—
—
—
Standalone Adjusted EBIT*
(estimate)
$
837
$
794
5
%
$
2,956
$
2,661
11
%
Net income margin
7.7
%
11.2
%
(350) bps
8.0
%
10.4
%
(240) bps
Adjusted EBIT margin*
16.1
%
17.1
%
(100) bps
15.1
%
15.6
%
(50) bps
Standalone Adjusted EBIT margin*
(estimate)
16.1
%
16.1
%
0 bps
15.1
%
14.5
%
60 bps
(1)
Consists of severance, facility closures,
and other charges associated with restructuring programs.
(2)
Consists of legal, consulting, and other
transaction and integration fees, and adjustments to contingent
consideration, as well as other purchase accounting related charges
and other costs directly related to the transactions.
(3)
Costs incurred in the Spin-Off and
separation from GE, including system implementations, audit and
advisory fees, legal entity separation, Founders Grant equity
awards, separation agreements with GE, and other one-time
costs.
(4)
Consists of gains and losses resulting
from the sale of assets and investments.
(5)
Primarily relates to valuation adjustments
for equity investments.
(6)
Estimated 4Q’22 quarter to date and FY’22
expense of recurring and ongoing costs required to operate new
functions required for a public company such as external reporting,
internal audit, treasury, investor relations, board of directors
and officers, stock administration, and expanding the services of
existing functions such as information technology, finance, supply
chain, human resources, legal, tax, facilities, branding, security,
government relations, community outreach, and insurance.
(7)
Estimated 4Q’22 quarter to date and FY’22
additional interest expense related to the GE HealthCare debt
issuances on November 22nd, 2022 and the draw down of the term loan
on January 3rd, 2023, the amortization of original issue discount
and deferred, debt issuance costs, and certain Euro to U.S. Dollar
cross currency interest rate swap arrangements with a notional
amount of $2.0 billion. Interest expense was calculated assuming
constant debt levels throughout the periods.
(8)
Estimated 4Q’22 quarter to date and FY’22
tax effect was determined by applying the respective statutory tax
rates to the pre-tax adjustments, as appropriate, in jurisdictions
where valuation allowances were not required. The applicable tax
rates could be impacted (either higher or lower) depending on many
factors including, but not limited to, the profitability in local
jurisdictions and may be different from the estimate.
Unaudited Net Income to Adjusted Net
Income* and Standalone Adjusted Net Income* (estimated)
For the three months ended
December 31
For the years ended December
31
($ In millions)
2023
2022
% change
2023
2022
% change
Net income attributable to GE
HealthCare
$
403
$
554
(27
)%
$
1,568
$
1,916
(18
)%
Add: Non-operating benefit (income)
costs
(50
)
(1
)
(382
)
(5
)
Add: Restructuring costs(1)
20
36
54
146
Add: Acquisition and disposition-related
charges (benefits)(2)
—
(14
)
(15
)
(34
)
Add: Spin-Off and separation costs(3)
95
7
270
14
Add: (Gain) loss on business and asset
dispositions(4)
—
—
—
(1
)
Add: Amortization of acquisition-related
intangible assets
32
31
127
121
Add: Investment revaluation (gain)
loss(5)
—
8
(1
)
31
Add: Tax effect of reconciling items
(11
)
(19
)
92
(67
)
Add: Certain tax adjustments(6)
50
—
80
—
Less: Income (loss) from discontinued
operations, net of taxes
—
6
(4
)
18
Adjusted net income*
$
539
$
596
(10
)%
$
1,797
$
2,103
(15
)%
Less: Estimated standalone costs(7)
—
50
—
200
Less: Estimated incremental interest
expense(8)
—
100
—
541
Less: Estimated tax effect of reconciling
items(9)
—
(35
)
—
(171
)
Standalone Adjusted net income*
(estimate)
$
539
$
481
12
%
$
1,797
$
1,533
17
%
Adjusted net income margin*
10.4
%
12.1
%
(170) bps
9.2
%
11.5
%
(230) bps
Standalone Adjusted net income margin*
(estimate)
10.4
%
9.7
%
70 bps
9.2
%
8.4
%
80 bps
(1)
Consists of severance, facility closures,
and other charges associated with restructuring programs.
(2)
Consists of legal, consulting, and other
transaction and integration fees, and adjustments to contingent
consideration, as well as other purchase accounting related charges
and other costs directly related to the transactions.
(3)
Costs incurred in the Spin-Off and
separation from GE, including system implementations, audit and
advisory fees, legal entity separation, Founders Grant equity
awards, separation agreements with GE, and other one-time
costs.
(4)
Consists of gains and losses resulting
from the sale of assets and investments.
(5)
Primarily relates to valuation adjustments
for equity investments.
(6)
Consists of certain income tax
adjustments, including the accrual of a deferred tax liability on
the prior period earnings of certain of the Company’s foreign
subsidiaries for which the Company is no longer permanently
reinvested and the impact of adjusting deferred tax assets and
liabilities to standalone GE HealthCare tax rates.
(7)
Estimated 4Q’22 quarter to date and FY’22
expense of recurring and ongoing costs required to operate new
functions required for a public company such as external reporting,
internal audit, treasury, investor relations, board of directors
and officers, stock administration, and expanding the services of
existing functions such as information technology, finance, supply
chain, human resources, legal, tax, facilities, branding, security,
government relations, community outreach, and insurance.
(8)
Estimated 4Q’22 quarter to date and FY’22
additional interest expense related to the GE HealthCare debt
issuances on November 22nd, 2022 and the draw down of the term loan
on January 3rd, 2023, the amortization of original issue discount
and deferred, debt issuance costs, and certain Euro to U.S. Dollar
cross currency interest rate swap arrangements with a notional
amount of $2.0 billion. Interest expense was calculated assuming
constant debt levels throughout the periods.
(9)
Estimated 4Q’22 quarter to date and FY’22
tax effect was determined by applying the respective statutory tax
rates to the pre-tax adjustments, as appropriate, in jurisdictions
where valuation allowances were not required. The applicable tax
rates could be impacted (either higher or lower) depending on many
factors including, but not limited to, the profitability in local
jurisdictions and may be different from the estimate.
Unaudited Diluted Continuing Earnings
Per Share to Adjusted Earnings Per Share* and Standalone Adjusted
Earnings Per Share* (estimated)
For the three months ended
December 31
For the years ended December
31
(In dollars, except shares outstanding
presented in millions)
2023
2022
$ change
2023
2022
$ change
Diluted earnings per share – continuing
operations
$
0.88
$
1.21
$
(0.33
)
$
3.04
$
4.18
$
(1.14
)
Add: Deemed preferred stock dividend of
redeemable noncontrolling interest
—
—
0.40
—
Add: Non-operating benefit (income)
costs
(0.11
)
(0.00
)
(0.83
)
(0.01
)
Add: Restructuring costs(1)
0.04
0.08
0.12
0.32
Add: Acquisition and disposition-related
charges (benefits)(2)
—
(0.03
)
(0.03
)
(0.07
)
Add: Spin-Off and separation costs(3)
0.21
0.02
0.59
0.03
Add: (Gain) loss on business and asset
dispositions(4)
—
—
—
(0.00
)
Add: Amortization of acquisition-related
intangible assets
0.07
0.07
0.28
0.27
Add: Investment revaluation (gain)
loss(5)
—
0.02
(0.00
)
0.07
Add: Tax effect of reconciling items
(0.02
)
(0.04
)
0.20
(0.15
)
Add: Certain tax adjustments(6)
0.11
—
0.17
—
Adjusted earnings per share*(7)
$
1.18
$
1.31
$
(0.13
)
$
3.93
$
4.63
$
(0.70
)
Less: Estimated standalone costs(8)
—
0.11
—
0.44
Less: Estimated incremental interest
expense(9)
—
0.22
—
1.19
Less: Estimated tax effect of reconciling
items(10)
—
(0.08
)
—
(0.38
)
Standalone Adjusted earnings per share*
(estimate)(7)
$
1.18
$
1.06
$
0.12
$
3.93
$
3.38
$
0.55
Diluted weighted-average shares
outstanding
458
454
458
454
(1)
Consists of severance, facility closures,
and other charges associated with restructuring programs.
(2)
Consists of legal, consulting, and other
transaction and integration fees, and adjustments to contingent
consideration, as well as other purchase accounting related charges
and other costs directly related to the transactions.
(3)
Costs incurred in the Spin-Off and
separation from GE, including system implementations, audit and
advisory fees, legal entity separation, Founders Grant equity
awards, separation agreements with GE, and other one-time
costs.
(4)
Consists of gains and losses resulting
from the sale of assets and investments.
(5)
Primarily relates to valuation adjustments
for equity investments.
(6)
Consists of certain income tax
adjustments, including the accrual of a deferred tax liability on
the prior period earnings of certain of the Company’s foreign
subsidiaries for which the Company is no longer permanently
reinvested and the impact of adjusting deferred tax assets and
liabilities to standalone GE HealthCare tax rates.
(7)
Adjusted earnings per share* and estimated
Standalone Adjusted earnings per share* amounts are computed
independently, thus, the sum of per-share amounts may not equal the
total.
(8)
Estimated 4Q’22 quarter to date and FY’22
expense of recurring and ongoing costs required to operate new
functions required for a public company such as external reporting,
internal audit, treasury, investor relations, board of directors
and officers, stock administration, and expanding the services of
existing functions such as information technology, finance, supply
chain, human resources, legal, tax, facilities, branding, security,
government relations, community outreach, and insurance.
(9)
Estimated 4Q’22 quarter to date and FY’22
additional interest expense related to the GE HealthCare debt
issuances on November 22nd, 2022 and the draw down of the term loan
on January 3rd, 2023, the amortization of original issue discount
and deferred, debt issuance costs, and certain Euro to U.S. Dollar
cross currency interest rate swap arrangements with a notional
amount of $2.0 billion. Interest expense was calculated assuming
constant debt levels throughout the periods.
(10)
Estimated 4Q’22 quarter to date and FY’22
tax effect was determined by applying the respective statutory tax
rates to the pre-tax adjustments, as appropriate, in jurisdictions
where valuation allowances were not required. The applicable tax
rates could be impacted (either higher or lower) depending on many
factors including, but not limited to, the profitability in local
jurisdictions and may be different from the estimate.
Free Cash Flow*
Unaudited
For the three months ended
December 31
For the years ended December
31
($ In millions)
2023
2022
% change
2023
2022
% change
Cash from (used for) operating
activities – continuing operations
$
1,050
$
1,063
(1
)%
$
2,101
$
2,134
(2
)%
Cash flow conversion
134
%
111
%
23 pts
Add: Additions to PP&E and
internal-use software
(94
)
(77
)
(387
)
(310
)
Add: Dispositions of PP&E
—
1
1
4
Free cash flow*
$
956
$
987
(3
)%
$
1,715
$
1,828
(6
)%
Free cash flow conversion*
95
%
87
%
8 pts
Non-GAAP Financial Measures in Outlook
GE HealthCare calculates forward-looking non-GAAP financial
measures, including Organic revenue growth, Adjusted EBIT margin,
Adjusted ETR, Adjusted EPS, and Free cash flow based on internal
forecasts that omit certain amounts that would be included in GAAP
financial measures. GE HealthCare does not provide reconciliations
of these forward-looking non-GAAP financial measures to the
respective GAAP metrics as it is unable to predict with reasonable
certainty and without unreasonable effort certain items such as the
impact of changes in currency exchange rates, impacts associated
with business acquisitions or dispositions, timing and magnitude of
restructuring activities, and revaluation of strategic investments,
amongst other items. The timing and amounts of these items are
uncertain and could have a substantial impact on GE HealthCare’s
results in accordance with GAAP.
Key Performance Indicators
Management uses the following metrics to provide a leading
indicator of current business demand from customers for products
and services.
- Organic orders growth: Rate of change period-over-period of
contractual commitments with customers to provide specified goods
or services for an agreed upon price, and excluding the effects of:
(1) recent acquisitions and dispositions with less than a full year
of comparable orders; and (2) foreign currency exchange rate
fluctuations in order to present orders on a constant currency
basis.
- Book-to-bill: Total orders divided by Total revenues within a
given financial period (e.g., quarter or FY).
Conference Call and Webcast Information
GE HealthCare will discuss its results during its investor
conference call today, February 6, 2024 at 8:30am ET. The
conference call will be broadcast live via webcast, and the webcast
and accompanying slide presentation containing financial
information can be accessed by visiting the investor section of the
website at https://investor.gehealthcare.com/news-events/events. An
archived version of the webcast will be available on the website
after the call.
Forward-looking Statements
This release contains forward-looking statements. These
forward-looking statements might be identified by words, and
variations of words, such as “will,” “expect,” “may,” “would,”
“could,” “plan,” “believe,” “anticipate,” “intend,” “estimate,”
“potential,” “position,” “forecast,” “target,” “guidance,”
“outlook,” and similar expressions. These forward-looking
statements may include, but are not limited to, statements about
the Company’s expected financial performance, including revenue,
revenue growth, profit, taxes, earnings per share, and cash flows,
and the Company’s outlook; and the Company’s strategy, innovation,
and investments. These forward-looking statements involve risks and
uncertainties, many of which are beyond the Company’s control.
Factors that could cause the Company’s actual results to differ
materially from those described in its forward-looking statements
include, but are not limited to, operating in highly competitive
markets; the Company’s ability to successfully complete strategic
transactions; the actions or inactions of third parties with whom
the Company partners and the various collaboration, licensing, and
other partnerships and alliances the Company has with third
parties; demand for the Company’s products, services, or solutions
and factors that affect that demand; management of the Company’s
supply chain and the Company’s ability to cost-effectively secure
the materials it needs to operate its business; disruptions in the
Company’s operations; changes in third-party and government
reimbursement processes, rates, contractual relationships, and mix
of public and private payers, including related to government
shutdowns; the Company’s ability to attract and/or retain key
personnel and qualified employees; global geopolitical and economic
instability, including as a result of the conflict between Ukraine
and Russia, the conflict in Israel and surrounding areas, and the
actions in the Red Sea region; public health crises, epidemics, and
pandemics, such as the Coronavirus Disease 2019 (“COVID-19”) and
their effects on the Company’s business; maintenance and protection
of the Company’s intellectual property rights, as well as
maintenance of successful research and development efforts with
respect to commercially successful products and technologies; the
impact of potential information technology, cybersecurity or data
security breaches; compliance with the various legal, regulatory,
tax, privacy, and other laws to which the Company is subject, such
as the Foreign Corrupt Practices Act and similar anti-corruption
and anti-bribery laws globally, and related changes, claims,
inquiries, investigations, or actions; the Company’s ability to
control increases in healthcare costs and any subsequent effect on
demand for the Company’s products, services, or solutions; the
impacts related to the Company’s increasing focus on and investment
in cloud, edge, artificial intelligence, and software offerings;
the impact of potential product liability claims; environmental,
social, and governance matters; the Company’s ability to operate
effectively as an independent, publicly-traded company; and the
Company’s level of indebtedness, as well as its general ability to
comply with covenants under its debt instruments and any related
effect on the Company’s business. Please also see the “Risk
Factors” section of the Company’s Annual Report on Form 10-K filed
with the U.S. Securities and Exchange Commission and any updates or
amendments it makes in future filings. There may be other factors
not presently known to the Company or which it currently considers
to be immaterial that could cause the Company’s actual results to
differ materially from those projected in any forward-looking
statements the Company makes. The Company does not undertake any
obligation to update or revise its forward-looking statements
except as required by applicable law or regulation.
About GE HealthCare Technologies Inc.
GE HealthCare is a leading global medical technology,
pharmaceutical diagnostics, and digital solutions innovator,
dedicated to providing integrated solutions, services, and data
analytics to make hospitals more efficient, clinicians more
effective, therapies more precise, and patients healthier and
happier. Serving patients and providers for more than 100 years, GE
HealthCare is advancing personalized, connected, and compassionate
care, while simplifying the patient’s journey across the care
pathway. Together our Imaging, Ultrasound, Patient Care Solutions,
and Pharmaceutical Diagnostics businesses help improve patient care
from diagnosis, to therapy, to monitoring. We are a $19.6 billion
business with 51,000 colleagues working to create a world where
healthcare has no limits.
Follow us on LinkedIn, Twitter, and Insights for the latest
news, or visit our website gehealthcare.com for more
information.
* Non-GAAP financial measure.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240206118712/en/
Investor Relations Contact: Carolynne Borders
+1-631-662-4317 carolynne.borders@gehealthcare.com
Media Contact: Tor Constantino +1-585-441-1658
tor.constantino@gehealthcare.com
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