GE HealthCare Q1 2025 earnings: Higher profitability, lower cash flow amid tariff-adjusted outlook

How did GE HealthCare perform in Q1 2025?

GE HealthCare (NASDAQ: GEHC) reported first-quarter financial results for 2025, revealing a solid start to the fiscal year with higher profitability across its core business lines. The company posted total revenues of $4.78 billion, reflecting a 3% increase year-over-year, or 4% on an organic basis. The growth was primarily driven by a strong performance in the United States, which offset currency headwinds and modest international softness.

Adjusted earnings before interest and taxes (EBIT) rose to $715 million, up 5% from the prior year. Adjusted EBIT margin improved by 30 basis points to 15.0%, bolstered by increased volume and operating efficiencies. Diluted earnings per share (EPS) increased to $1.23, compared to $0.81 a year ago, while adjusted EPS grew to $1.01 from $0.90.

However, operating cash flow dropped significantly to $250 million from $419 million, and free cash flow fell to $98 million, down 64% year-over-year. This decline was attributed to higher investments and a shift in working capital, including inventory buildup and lower compensation-related accruals.

Which segments contributed most to GE HealthCare’s growth?

GE HealthCare operates four main segments: Imaging, Advanced Visualization Solutions (AVS), Patient Care Solutions (PCS), and Pharmaceutical Diagnostics (PDx). Each segment recorded revenue growth, but performance varied by margin and EBIT trajectory.

Imaging, the company’s largest segment, recorded revenues of $2.14 billion, up 4% year-over-year and 5% on an organic basis. Segment EBIT surged 20% to $199 million, with margin improving 130 basis points to 9.3%. New product introductions and strong U.S. demand contributed to the uplift.

Advanced Visualization Solutions posted 1% reported growth to $1.24 billion, with EBIT up 2% to $261 million and a robust margin of 21.1%. Patient Care Solutions grew 1% to $753 million in revenue, but segment EBIT dropped 41% to $48 million, pressured by cost dynamics and investments in operational realignment.

Pharmaceutical Diagnostics led in margin performance with a 6% revenue increase to $632 million and an 8% organic growth rate. EBIT rose 15% to $205 million, with margins improving by 270 basis points to 32.4%, aided by strong demand and scale efficiencies following the Nihon Medi-Physics acquisition.

How are tariffs impacting GE HealthCare’s 2025 outlook?

While the company reaffirmed its 2025 organic revenue growth target of 2% to 3%, it revised its adjusted EBIT margin guidance downward. GE HealthCare now expects full-year adjusted EBIT margin to range between 14.2% and 14.4%, a decline from its previous forecast of 16.7% to 16.8%, largely due to the inclusion of estimated tariff impacts.

Adjusted EPS is now forecast in the range of $3.90 to $4.10, down from the prior estimate of $4.61 to $4.75. The revised guidance includes an $0.85 impact attributed to tariffs. Free cash flow expectations have also been lowered to at least $1.2 billion, compared to earlier guidance of at least $1.75 billion.

The tariff assumptions incorporate a return to previous reciprocal U.S. tariffs on imports from the rest of the world by July 2025, while maintaining existing bilateral tariffs with China, Mexico, and Canada. The forecast excludes possible Section 232 tariffs, highlighting ongoing global trade uncertainty.

What strategic initiatives did GE HealthCare launch in Q1?

During the first quarter, GE HealthCare completed its acquisition of Nihon Medi-Physics, a leading radiopharmaceutical company in Japan, further strengthening its precision care strategy. The transaction is expected to accelerate the global rollout of next-generation radiotracers.

A major milestone was the U.S. launch of Flyrcado (flurpiridaz F 18), a novel PET radiotracer for cardiac imaging. The launch was supported by a national contract manufacturing network and a growing customer base. Additionally, the company introduced the Revolution Vibe CT system with AI-based cardiac imaging, the AltiX AI.i platform for invasive cardiology, and Freelium, a sealed magnet MRI platform designed for sustainable healthcare access.

These innovation efforts reflect the company’s ongoing push into AI-enabled diagnostic platforms and cloud-based solutions aimed at improving precision medicine, operational efficiency, and care pathways in cardiology and oncology.

What is GE HealthCare’s capital return plan?

GE HealthCare’s board authorized a $1 billion share repurchase program during the quarter, underlining management’s confidence in the company’s long-term prospects. The program is not subject to an expiration date and allows for opportunistic buybacks in open-market or privately negotiated transactions.

According to Chief Financial Officer Jay Saccaro, the repurchase authorization complements GE HealthCare’s broader capital allocation strategy, which remains centered on reinvesting in growth while maintaining balance sheet strength. Since its spin-off from General Electric, the company has prioritized debt reduction and organic investment to drive future value.

How is the market responding to GE HealthCare’s performance?

Sentiment Analysis: Investor sentiment around GE HealthCare remains cautiously optimistic. The 51% year-over-year surge in net income and margin expansion is viewed positively by institutional investors, particularly given the strong U.S. order book and record organic order growth of 10%. However, the lowered full-year outlook—specifically due to tariff-related margin pressures—has tempered enthusiasm.

Stock Performance: As of April 30, 2025, GEHC shares were trading near $82, having gained approximately 12% year-to-date. The share repurchase announcement supported the stock in pre-market trading, although concerns over declining free cash flow and revised EPS guidance led to intraday volatility.

Buy-Sell-Hold: Analyst consensus remains tilted towards a “Hold,” with select upgrades to “Buy” contingent on the trajectory of Q2 cash flows and any signs of tariff mitigation. Institutional flows have shown mixed behavior, with defensive repositioning observed among healthcare-focused ETFs.

FII/DII Activity: Foreign institutional investors remain net holders but have reduced their pace of accumulation amid broader concerns about U.S.–China trade frictions. Domestic institutions are selectively increasing positions, betting on GE HealthCare’s strength in diagnostic imaging and pharmaceuticals.

What lies ahead for GE HealthCare?

GE HealthCare enters the remainder of 2025 with a clear strategy anchored in innovation, geographic expansion, and margin resilience. Despite macroeconomic uncertainties and regulatory challenges, the company’s continued investment in radiopharmaceuticals, AI-enabled imaging, and enterprise healthcare solutions positions it to benefit from longer-term healthcare digitization trends.

As GE HealthCare integrates Nihon Medi-Physics and expands its footprint across Asia and North America, investors will closely monitor its ability to offset rising costs and convert order momentum into sustained free cash flow.