# GE HealthCare (GEHC)

Sector: Medical devices

| Field | Value |
|---|---|
| Price | $70.40 |
| Fair value (Analysts) | $88.00 |
| Discount to fair value | 20% |
| Fair value uncertainty (Analysts) | Medium |
| Economic moat (Analysts) | Wide |
| LSEG analyst rating (1 strong buy to 5 strong sell) | 2 |
| Data as of | 2026-10-15 |
| Next earnings | 2026-10-29 (estimate) |

## In short

Cost inflation, China and a loss-making monitoring unit hold GE HealthCare's profit back, and higher margins and cash from record orders over the next four to six quarters can close the gap.

## Themes and gap

- Themes: Tariffs and trade (trade-tariffs), China and geopolitics (china-geopolitics), New management (management-change)
- Gap type: Can close (closable)
- Why: The Q3 2026 report, the 2027 outlook in early 2027 and the Patient Care Solutions review show whether record orders turn into higher margins and cash.

## About

GE HealthCare makes medical imaging machines, imaging drugs and patient monitoring equipment for hospitals and clinics around the world. It has three segments. Advanced Imaging Solutions sells CT, MRI, X-ray, ultrasound and molecular imaging machines, with software and service contracts, and gave about 71% of revenue in Q2 2026. Pharmaceutical Diagnostics sells contrast agents and radioactive tracers, such as Flyrcado, that doctors inject before a scan, and it has the highest margin. Patient Care Solutions sells patient monitors and other hospital equipment, and it lost money in Q2 2026. Services and drugs give repeat revenue from the large installed base of machines. GE HealthCare became an independent company in a spin-off from General Electric in 2023. In March 2026, it bought Intelerad, an imaging software company, for about $2.3 billion.

## Thesis

GE HealthCare trades at a discount because its profit grows more slowly than its orders, and the market doubts that it can convert record orders into higher margins and cash. In 2026, inflation in memory chips, oil and freight costs about $250 million, and in April 2026 the company lowered its profit and free cash flow outlook. China's volume-based buying and local competitors lower orders and prices there, and tariffs add cost. Patient Care Solutions lost money in Q2 2026, and the company now reviews strategic options for it. The CFO also changed twice in two months. For the gap to close, GE HealthCare must meet its 2026 guidance of an adjusted EBIT margin of 15.4% to 15.7%, adjusted EPS of $4.80 to $5.00 and free cash flow of about $1.6 billion, after only $180 million of free cash flow in the first half. Record orders, up 11.1% organically in Q2 2026, must turn into faster revenue growth in 2027, and the company must fix or sell Patient Care Solutions. The first test is the Q3 2026 report, expected at the end of October 2026. The next tests are the Q4 2026 report with the 2027 outlook, expected in early 2027, and the result of the Patient Care Solutions review, which has no date. If margins and cash flow recover, the gap can close over the next four to six quarters. The main risk is that inflation, China and tariffs keep margins flat while the company spends on new products.

## Checkpoints

- Oct 29, 2026 (estimate): Q3 2026 results: margin and free cash flow. Status: Pending. Watch: An adjusted EBIT margin on track for 15.4% to 15.7% and strong free cash flow toward the $1.6 billion target pass; lower guidance or weak cash flow fails.
- Feb 2027 (estimate): Q4 2026 results and 2027 outlook. Status: Pending. Watch: A 2027 outlook with faster organic revenue growth from the record backlog and a higher margin passes; flat margins or lower growth fail.
- 2027 (estimate): Result of the Patient Care Solutions strategic review. Status: Pending. Watch: A sale or a plan that returns the segment to profit without large charges passes; continued losses with no decision fail.

## Balance sheet

- Cash: $2.1B
- Debt: $10.2B
- Net debt: $8.1B
- Interest cover: 6.0×
- Undrawn credit line: $3.5B
- Debt due within 12 months: $2.0M
- Last debt due: 2052

GE HealthCare had about $10.15 billion of debt principal at June 30, 2026: $9.5 billion of senior unsecured notes in nine series due from 2027 to 2052, and $650 million drawn on a delayed-draw term loan that matures in March 2029. Debt rose and cash fell from $4.49 billion at December 31, 2025, because the company paid about $2.3 billion in cash for Intelerad on March 18, 2026. It borrowed $500 million on its 364-day credit line and $650 million on the term loan for the deal, then repaid the $500 million, and it also repaid a $500 million term loan at maturity. No amount was drawn on its revolving credit lines at June 30, 2026: $3.0 billion to March 2030 and $500 million to February 2027. Interest cover is operating income divided by net interest and other financial charges of $210 million for the first half of 2026. The company bought back $200 million of shares in Q2 2026, and $500 million of the program remained.

As of 2026-06-30.

Sources:

- https://www.sec.gov/Archives/edgar/data/1932393/000193239326000046/gehc-20260630.htm
- https://www.sec.gov/Archives/edgar/data/1932393/000193239326000045/release2q26earnings.htm

## Recent events

- 2026-09-22: GE HealthCare appointed Pascal Desroches, the CFO of AT&T, to its board from January 4, 2027.
- 2026-08-18: GE HealthCare appointed William Grogan, the CFO of Xylem, as CFO from September 14, 2026.
- 2026-07-29: GE HealthCare reported Q2 2026 results. Revenue was $5.3 billion, up 5.7%, and organic revenue grew 3.5%. Organic orders grew 11.1%, a record, and backlog was $23.9 billion. Adjusted EPS was $1.13, up 6.6%, with help from tariff refunds. Patient Care Solutions revenue fell 13.3% and the segment lost $26 million. The CEO said that the company reviews strategic options for Patient Care Solutions. The company kept its 2026 guidance.
- 2026-07-23: GE HealthCare said that CFO Jay Saccaro will leave for a role outside medical technology, and it named Controller George Newcomb interim CFO. It also gave preliminary Q2 2026 results and kept its 2026 guidance.
- 2026-04-29: GE HealthCare reported Q1 2026 results. Revenue was $5.1 billion, up 7.4%, but organic orders grew only 1.1%. A supplier problem in Pharmaceutical Diagnostics lowered profit. The company kept its revenue outlook but lowered its profit and free cash flow outlook because of higher costs for memory chips, oil and freight.

## Risks

- High: Costs rise faster than prices. The company expects about $250 million of inflation from memory chips, oil, freight and other parts in 2026, and it lowered its profit outlook in April 2026. Tariffs on imported parts add cost, and the company does not expect more material tariff refunds.
- Medium: In China, volume-based buying by the government and strong local competitors lower orders and prices. The company said in its Q2 2026 10-Q that these factors can continue to affect orders and revenue, and trade tension between the US and China can make this worse.
- Medium: Patient Care Solutions revenue fell 13.3% in Q2 2026, and the segment had an EBIT margin of minus 3.8%. A sale or other strategic option can bring charges or a low price, and more losses lower group margins.
- Medium: Free cash flow was only $180 million in the first half of 2026, against a full-year target of about $1.6 billion. If the second half falls short, the company has less cash for debt repayment, buybacks and acquisitions.
- Low: The CFO changed twice in 2026: Jay Saccaro left in August, and William Grogan started on September 14, 2026. A new CFO can change guidance practice or capital plans.

## Links

- Page: https://picks.kamadorueda.com/company/GEHC/
- History of changes: https://picks.kamadorueda.com/company/GEHC/history/
- JSON with full history: https://picks.kamadorueda.com/data/company/GEHC.json

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