Healthcare technology company GE HealthCare Technologies (NASDAQ:GEHC) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 7.1% year on year to $5.70 billion. Its non-GAAP profit of $1.44 per share was 3% above analysts’ consensus estimates.
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GE HealthCare (GEHC) Q4 CY2025 Highlights:
- Revenue: $5.70 billion vs analyst estimates of $5.60 billion (7.1% year-on-year growth, 1.7% beat)
- Adjusted EPS: $1.44 vs analyst estimates of $1.40 (3% beat)
- Adjusted EBITDA: $1.06 billion vs analyst estimates of $1.06 billion (18.7% margin, in line)
- Adjusted EPS guidance for the upcoming financial year 2026 is $5.05 at the midpoint, beating analyst estimates by 2.5%
- Operating Margin: 14.5%, in line with the same quarter last year
- Organic Revenue rose 4.8% year on year (beat)
- Market Capitalization: $37.66 billion
StockStory’s Take
GE HealthCare’s fourth quarter saw positive momentum, with the company surpassing Wall Street’s revenue and non-GAAP profit expectations. Management pointed to robust demand in pharmaceutical diagnostics and steady growth in imaging and advanced visualization solutions as key drivers. CEO Peter Arduini highlighted progress in bringing new products to market, including successful launches in Europe and advanced cardiovascular ultrasound systems. The company also benefited from large enterprise agreements and a record order backlog, with operational improvements helping to mitigate tariff impacts.
Looking forward, GE HealthCare’s outlook centers on accelerating contributions from recent product launches and strategic acquisitions. Management expects continued strength in the capital equipment environment, while taking a cautious approach to China given market uncertainties. CFO Jay Saccaro emphasized ongoing investment in innovation and productivity improvements, noting that expanding the recurring service business and new digital tools from the IntelliRed acquisition are expected to support margin and earnings growth. As Arduini stated, the company remains focused on driving profitable growth through operational discipline and a robust product pipeline.
Key Insights from Management’s Remarks
Management attributed Q4 outperformance to double-digit growth in pharmaceutical diagnostics, strong enterprise deal flow, and a ramp-up in new product introductions—while also flagging ongoing headwinds from tariffs and regional market dynamics.
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Pharmaceutical diagnostics momentum: The pharmaceutical diagnostics segment delivered double-digit organic growth, propelled by global demand for contrast media and radiopharmaceuticals. New product adoption in the U.S. and Europe was cited as a key factor supporting segment expansion.
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Large enterprise deals: The company secured significant multiyear agreements globally, including a seven-year collaboration with the University of Rochester Medical Center and expanded partnerships in Indonesia and EMEA. These agreements typically include service components that drive recurring revenue at attractive margins.
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New product vitality rate: Management reported a three-year new product vitality rate of 55%, meaning over half of revenue is now generated from products launched within the past three years. Notable launches included Omni Total Body PET, NexGen SPECT, and Vivid Pioneer cardiovascular ultrasound systems.
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Operational efficiency gains: The Heartbeat business system, focused on process optimization and productivity, helped reduce past-due backlog by 25% on average each month versus last year. This initiative also supported improved cash conversion and on-time product delivery.
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Tariff mitigation and cost control: To offset approximately $100 million in quarterly tariff expenses, GE HealthCare shifted production lines and partnered with contract manufacturers to optimize global supply chains. These actions, enabled by the Heartbeat initiative, partially offset margin pressure and improved operational resilience.
Drivers of Future Performance
Management’s guidance for the next year is anchored in the rollout of new products, expanding service contracts, and prudent cost controls amid regional uncertainties.
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Product pipeline ramp: The company expects recently launched products—including advanced imaging modalities and AI-enabled solutions—to begin contributing to order growth later in the year. Management noted that global regulatory approvals are a gating factor, but once cleared, these offerings could add significant incremental sales and higher-margin service contracts.
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Service business expansion: Growth in recurring service revenue is a strategic priority, supported by a growing installed base and higher capture rates from new, technologically advanced equipment. The pending IntelliRed acquisition is expected to further accelerate the shift toward recurring revenue and provide additional digital tools for clinical operations.
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Cautious approach to China: While commercial execution is improving, management is budgeting for a decline in China due to market and regulatory headwinds. They view this as a conservative baseline, with potential upside if market conditions improve throughout the year.
Catalysts in Upcoming Quarters
In the quarters ahead, the StockStory team will be closely tracking (1) the pace and breadth of regulatory approvals and subsequent ramp-up for recently launched imaging and diagnostic products, (2) the integration and impact of the IntelliRed acquisition on recurring revenue and digital platform adoption, and (3) progress in expanding service contract penetration and recurring revenue streams. Additionally, we will monitor any improvement in China as a potential upside catalyst to guidance.
GE HealthCare currently trades at $82.63, up from $78.78 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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