GE HealthCare Technologies Inc. (GEHC) Q3 2026 Earnings Call Transcript

Good day, and thank you for standing by. Welcome to the GE Healthcare 3rd Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Carolyn Borders, Head of Investor Relations. Please go ahead.

Thanks, Operator. Good morning, and welcome to GE Healthcare's third quarter 2026 earnings call. I'm joined by our President and CEO, Peter Arduini, CFO Bill Grogan, and Controller and Chief Accounting Officer George Newcomb. Our conference call remarks will include both GAAP and non-GAAP financial results. Reconciliations between GAAP and non-GAAP measures can be found in today's press release and in the presentation slides available on our website. During this call, we'll make forward-looking statements about our performance. These statements are based on how we see things today. As described in our SEC filings, actual results may differ materially due to risks and uncertainties. With that, I'll hand the call over to Peter.

Thanks, Carolyn. Good morning, and thank you for joining us today. Before I review highlights from the quarter, I want to take a moment to welcome Bill. He brings tremendous experience and a strong track record, and I'm looking forward to partnering with him as we execute against our strategy and deliver on our priorities. Looking at our third quarter results on slide three, we delivered strong top-line growth and margin expansion across all segments. Broad-based demand and advanced imaging solutions and pharmaceutical diagnostics supported healthy orders, book-to-bill, and backlog. Heartbeat is strengthening how we run the company and helping our teams deliver on commercial and operational simplification. A great example of performance driven by Heartbeat this quarter is Patient Care Solutions. The team identified root causes of prior supply challenges and implemented standard work and daily management to drive ongoing improvements. This drove backlog conversion and stronger operational performance. Taken together, momentum in our business has enabled us to raise our full-year 2026 guidance, which Bill will cover later in the call. Turning to slide four, let's look at how we're advancing our growth strategy. We reached key regulatory milestones in the quarter on two imaging platforms with market differentiating features. We received CE marking for Photonova Spectra, our photon counting CT system, and Starguide GX, our spec CT system, is pending FDA clearance. This broadens our ability to We also expanded our ultrasound platforms in cardiovascular, women's health, and general imaging with the launch of several new products to meet the growing demand for noninvasive imaging. We continue to see general imaging ultrasound as an attractive market where we're investing for the long term. With growing demand, staffing constraints, and more distributed care, ultrasound's versatility across a broad range of exams is increasingly valuable. PDX delivered another excellent quarter with growth and contrast media and radiopharmaceuticals, including proprietary tracers aligned to disease states. This was supported by momentum and precision medicine and growing demand for targeted diagnostics in oncology, cardiology, and neuro. Earlier this month, we announced our plans to acquire SOFI Biosciences. Upon close, this will establish a final mile footprint of U.S. PET radiopharmaceutical supply. It will also strengthen our pipeline through FAPI 74, a Phase III PET tracer, with the potential to help diagnose and treat a range of cancers and other diseases. Heartbeat is driving improvements in execution across the company, keeping our teams focused on SQDCI, safety, Quality, delivery, cost, and innovation in that order. In services, standardized digital support is helping our field engineers resolve more issues on the first visit. We expect this to save approximately 10,000 hours of field time across CT, MR, and X-ray in the U.S. and get customers back up faster. In AIS, stronger standard work and operating rigor around variable cost productivity delivered incremental cost reductions, helping partially offset inflation. We recently entered multi-year strategic agreements with several leading technology partners to secure memory chips to strengthen the resiliency and predictability of our supply chain amid growing cross-industry demand for advanced computing components. We continue to pursue agreements to position us for the future. Lastly, before I hand the call over to Bill, today we announced that Jeanette Bankus, who leads our PCS business, will be leaving for a CEO role at a non-competitive, publicly traded company. We thank her for her contributions and wish her the best. Leveraging our strong succession pipeline, I'm excited to announce that Neil Sandy, currently head of product strategy and management for PCS, will become the CEO of the business. I have tremendous confidence in Neil's capabilities given his current role and more than 30 years of experience in the industry. We remain focused on building on the progress the team achieved in the quarter, and we're also evaluating strategic options for this business. With that, Bill will walk through the financials and guide.

Bill? Thanks, Pete. Let me start by saying how excited I am to have joined GE Healthcare. I've been impressed by the talent and commitment of the team, and I look forward to helping to build on the existing foundation as we execute on the significant opportunities ahead. Now let's turn to our third quarter financial results on slide five. We're pleased with our strong performance on both the top and bottom line, and with growth ahead of expectations. Revenue of $5.5 billion increased 6.2% organically, with growth across all segments. On a reported basis, we had strong performance in both product and service revenues at 6.7% and 8.1% growth, respectively. Organic orders grew 4%. As a reminder, orders growth in the third quarter of last year was 5.7 percent, so we're growing mid-single digits on a strong baseline. On a trailing 12-month basis, organic orders growth was 4.6 percent. Book-to-bill was 1.03 times, and we exited the quarter with a backlog of $23.7 billion, up $2.5 billion, or 12 percent year-over-year. We made progress on margin expansion this quarter, delivering adjusted EBIT margin of 16.6%, up 180 basis points. I'll discuss the operational drivers in more detail on the next slide. With our strong execution in the quarter, we delivered adjusted EPS of $1.34, up 25.1%. Lastly, our free cash flow was $793 million, up $310 million versus the prior year. On slide six, we'll look at the drivers of margin expansion in the quarter. Our commercial execution helps us grow profitably, as volume provided a healthy tailwind to margin. Additionally, the price and cost mitigation actions we've been taking across the business are starting to deliver a more meaningful benefit. Tariff expense was also lower than the prior year. Margin was negatively impacted by inflationary costs from Emory chips, as well as the impact of higher oil prices across our supply chain. As we think about our margin expansion framework, it is built around two key areas underpinned by heartbeat, commercial execution and operational simplification. Starting with commercial execution, our focus is on driving high-quality, profitable growth. This includes capturing strategic pricing opportunities, standardizing our product launch playbook, and bringing new products to market at higher gross As I've been coming up to speed on our business, a strong example is our vivid cardiovascular platform, where differentiated AI-enabled capabilities supported premium pricing, while a simplified design reduced manufacturing costs. On the operational side, we are simplifying how we run the business and reducing complexity across the organization. This includes advancing product platforming, optimizing our structural cost base, streamlining internal processes to eliminate rework, and the VCP examples Pete mentioned earlier. Together, these actions are helping us improve efficiency and create a more scalable operating model while supporting margin expansion. Let's move to our consolidated segment performance on slide 7. Starting with advanced imaging solutions, organic revenue grew 4.5 percent, driven by strength and CT, cardiovascular and interventional solutions, and surgical innovations. EBIT margin expanded 130 basis points year-over-year, driven by volume, reduced tariff expense, and price. This was partially offset by inflation. Demand for our cardiology solutions also increased, which was reflected in demand for our AI-enabled CT solutions, MR upgrades, and cardiovascular ultrasound. Moving to pharmaceutical diagnostics, we delivered robust organic revenue growth of 13.8% with contributions from contrast media and radiopharmaceutical products. Segment EBIT margin expanded 50 basis points to 29.9%, driven by volume and price, partially offset by planned investments in new products and our innovation pipeline. As mentioned, we also announced the planned acquisition of SOFI Biosciences. SOFI's revenue will add approximately 1% of total company revenue on an annualized basis. In the full year of ownership, revenue is expected to grow in low double digits with accretive adjusted EBIT margin and adjusted EPS. Patient care solutions delivered significant sequential improvement in the quarter. In year-over-year, organic revenue grew 8.8%, driven by improved operational performance, including better product fulfillment in monitoring solutions and maternal infant care. Backlog continues to grow alongside revenue. Segment EBIT margin expanded 480 basis points year-over-year, primarily driven by higher volume and cost productivity. Third quarter performance was better than expected with strong product fulfillment, driven by daily management and improved supplier and factory execution. We expect this to benefit us in the future. However, keep in mind that the fourth The fourth quarter of 2025 had an approximate $45 million revenue benefit from the release of a product hold. Turning to cash performance on slide eight, we delivered free cash flow of $793 million in the third quarter. The year-over-year increase was supported by a reduction in net tariff impact, including lower payments, as well as refunds in the quarter. Additionally, operational profitability and timing of collections helped drive year-over-year improvements. We also increased our cash dividend by 14%, further enhancing returns to shareholders. Now let's turn to our outlook on slide 9. Our continued execution gives us increased confidence in our outlook. As a result, we are raising several of our full-year 2026 metrics. We now expect organic revenue growth of approximately 4%, adjusted EBIT margin in the range of 15.5% to 15.7%, Adjusted EPS in the range of $4.95 to $5.05 per share, and free cash flow in excess of $1.6 billion. We expect our adjusted effective tax rate to be in the range of 20 to 21 percent for the full year, and forward exchange tailwind to revenue of approximately 75 basis points. With that, I'll turn the call back to Pete.

Thanks, Bill. I'd like to spend a few minutes highlighting PDX, a great example of how we're executing our D3 strategy, which brings together smart devices and drugs with a disease-state focus in AI, enabling more precision care. PDX has delivered at least high single-digit growth for five straight quarters. We're investing in strengthening our supply chain and manufacturing capabilities and expand where we can create value. As populations age and chronic disease rises, clinicians need imaging that answers sharper questions, which treatment, for which patient, and when. Managing the diseases often requires imaging at several points along the patient journey, from diagnosis to treatment to monitoring. Our agents are used in many of those imaging scans. Because each scan uses a dose, PDX revenue is recurring and grows with patient volume. About three-quarters of the portfolio today is contrast media, where volumes grow with global procedure demand. We're also investing in what comes next with our MR manganese-based contrast agent. It has the potential to address a nearly $1.2 billion market, and we're making good progress on our combined Phase II and Phase III international trial. The remaining balance of Thank you. We continue to see increased demand for our radiopharmaceutical portfolio, including Vizimo and Seriana, and we're also seeing strong performance from established products like DatScan, our spec imaging agent for patients with suspected Parkinson's disease types. Meanwhile, Furcato is on track. We delivered approximately 680 doses for the week ending October 23rd, and we're seeing growing adoption across a broad-based range of customer types. Those include the existing cardiac PET-CT programs that have been partially or fully converted to Furcato, as well as others that are converting from SPECT to PET. This adoption reflects Mercado's diagnostic capabilities, longer half-life, and flexible infrastructure. To help expand the final mile distribution of these radiopharmaceuticals, we plan to acquire SOFI Biosciences. Pairing SOFI's network with our manufacturing scale will expand access and strengthen supply reliability, enabling us to directly manage a portion of a radiopharmaceutical manufacturer. It will also position us to advance the next generation of precision care, including PSMA, FAPI, and Theranostics, where the same molecules that diagnose a disease help guide targeted treatment. Simply put, PDX pairs resilient, recurring revenue today with a pipeline and footprint to extend that growth. In summary, we're pleased with third-quarter results and, importantly, the strong contributions from our team. Heartbeat is helping us strengthen commercial execution and operational performance. Our focus on standard work and daily management has been critical in driving more consistent performance. We continue to advance our new wave of innovation, achieving key regulatory milestones in the quarter, and we're executing on our priorities, and our performance year-to-date gives us confidence in delivering on our commitments for patients, customers, and shareholders. With that, we'll open up the call to questions.

Thank you, Peter. I'd like to ask participants to please limit yourself to one question and one follow-up. Operator, can you please open the line?

Thank you. As a reminder, to ask a question, please press star 11 in your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Travis Steed with Bank of America Securities. Your line is now open.

Hey, thanks for taking the question, and Bill, looking forward to working with you. Congrats on the new job at GE. I'd start with the first question on the CapEx environment. There's a lot of questions on 340B and the macro and kind of what you're seeing on the CapEx environment, and I did have one follow-up.

Hey, Travis, thanks. Look, as you saw and you heard our comments, we're pleased with the quarter results, the strong execution. I think you're starting to see some of the product differentiation coming through. But, you know, relative to the capital budget market, you know, particular technologies like what we do in imaging, you know, from all of our survey data, discussion with CFOs, ranks at the top of the list. I think you know we do a survey of kind of same-store sales with customers. And fundamentally, I would say that the energy and positive focus on that survey stays the same. I mean, it positions as well, I think, as we go into Q4 into next year. I know there's been some commentary around procedures pullback here and there in different areas. You know, we haven't seen that directly, either in scan data or actually contrast use data at this point. And, you know, indicators that would demonstrate slowdown or changes like that have to be multiple, multiple quarters. So I think we start seeing it coming through in our equipment. And, you know, one of the things about the imaging world is, or other capital equipment, a lot of these are programs that are planned. You make a decision now for an installation that might be 12, 18, 24 months out. And I would say our, you know, funnel is as strong as it's ever been at this point in time. So we feel good about their trajectory, you know, as we come at the end of the year and as that, you know, converts into the beginning of 27.

Great. Thank you. And the follow-up question is more on the backlog. This quarter was down a little bit. Booked the bill 1.03. It was the lowest since first quarter 24. Is that just lumpiness you're seeing in quarter-to-quarter volatility? And, you know, I guess part of it's probably fulfilling last quarter's strong orders as well.

Yeah, no, I think that's it, Travis. I mean, I think, as you know, and many follow us from an order standpoint, you know, with big deals that we do that can be, you know, 100 million plus, you have some land in a given quarter. If they slide out by a week, it obviously creates a significant lumpiness. But we feel quite good about the orders. You know, Bill had mentioned coming off a strong year last year, both PDX and AIS did well. I would comment that our pipeline of opportunities remains strong, is up, which is, you know, an underpinning of the resiliency that we see out in the marketplace. So, you know, all of that, we feel quite good about it. I think, you know, from a standpoint of where we are with our capital equipment cycles and stuff, things are looking pretty good on the conversion. As I look out into Q4, you know, our orders looks a little bit better than we actually had in Q3.

Great. Thanks a lot.

Thank you. Thank you.

Our next question comes from the line of Vijay Kumar with Evercore ISI. Your line is now open.

Good morning, Pete, and thanks for taking my question. And, Bill, congrats on the role. I guess my first question, Pete, is on Farkato. You gave the weekly dose assumption and the revenue run rate. How are you thinking about the path to 500 run rate exiting 28? How does SOFI help? I think it makes the last mile connectivity. But how should we think about the ramp when you think SOFI is part of GE Healthcare? Does it improve your visibility to that half a billion exit rate in fiscal 28?

Yeah, Vijay, look, I think with Fricado, short answer is we feel very good about the half billion exiting 2028. As I mentioned on the call, we're progressing as we expected. I feel good about the momentum and the weekly bill. I think we're seeing broad-based growth and interest. I think one of the interesting areas is, as I think we know, this started out as much as with heavy interest in pet users that were already in cardiovascular, and that continues. I think we're starting to also see now the broadening of spec users that are saying it's time to kind of start considering moving into the pet world. And that's important because if you remember, the long-term opportunity is over 80% spec to pet. So both of those are growing. I think our funnels at this point in time are up significantly, which is what we look at on a forward metric about opportunities and what our conversion rate would be. You know, one of the other key metrics I mentioned last quarter was the amount of customers that we converted. We converted about the same percentage of customers this quarter as we did last. And again, those will begin to build. It's that 60-day cycle of only a case or two until they get reimbursement, and then that can ramp up into double digits. So things look good. I think, again, the positivity that we see from customers or hear from customers on all the attributes discussed, image quality, dose, management with larger patients, all those things are still playing out. And then just notably, I think I mentioned in the comments, the larger portfolio at Radiopharma, meaning breast cancer imaging relative to other cancers and stuff, continues to grow. And that's important because it also means that department within an institution gets more focus, so there tends to be more dollars allocated in that area as well, which we're beginning to see.

That's helpful, Pete. And maybe my second one on China, in the region got back to growth. Has China bottomed up? Is it back to growth? What is the normalized outlook, Pete? And there are some questions coming on maybe imaging VBP in China. If there is one, could you elaborate on what the impact is?

Yeah, Vijay, I don't know if I would give a full prediction as everything completely changed, but I can give you the play-by-play as we see it. And obviously, we've seen quarterly improvement within China. I think you'll see we had 7% in the growth in the quarter. Now, albeit a majority of that was still driven by FX, it was positive within the quarter. And the market is definitely recovering. We're seeing activity improvement, which translates into consistency in tenders that are planned, tenders that are executed. We are actually seeing more VBP, but I would say, you know, we've been changing our tactics, what configurations we offer, how we go to market that way, how we think about, you know, educating and interacting with a province or a smaller community. And so I think, you know, our team that are led by Will has done a really nice job of evolving the channel. That being said, I think, you know, there's still lots of wood to chop, so to speak, here on advancing growth within China. But we were pleased with the results that the team put up here for the quarter. Understood.

Thank you.

Thank you. Our next question comes from the line of Matt Taylor with Jeffries. Your line is now open.

Hi. Good morning. This is Matthew on for Matt Taylor. Thanks for taking our question. Congrats on the quarter. I wanted to ask about these multi-year agreements you have with technology partners, and particularly on securing memory trip supply. Could you possibly expand on how this helps you manage your costs going forward?

Yeah, Matthew, I think, you know, we mentioned on the call that we've recently aligned that. I think, look, pull the lens back big picture. It's no secret that the growth of data centers and AI has a big vortex effect on certain components around the industry. We think that's going to most likely exist for multiple years as this ramp up goes. So we've taken an ecosystem approach to take a look at all of those things that could affect our business positively or negatively and reached out to the suppliers in the industry with what we believe is adequate lead time to secure first supply and obviously manage pricing the best that we can. You know, at the end of the day, getting locked in pricing agreements on some of these things isn't probably realistic, but being in a favored nation status that we're first in line to be able to take advantage of both supply and price is what we've been able to do. So, you know, we feel quite good about where we are relative to some of the critical components like memory chips and stuff. But I think as others have talked about over time, this will evolve into other components And we're already focused on that. So I feel quite good about the work that Phil and the team have done broadly to be able to secure what we need to obviously deliver to our customers here, not only in the rest of the year, but into 27. That's very helpful. Thank you.

Thank you. Our next question comes from the line of Robert Marcus with J.P. Morgan. Your line is now open.

Hi, good morning. Congrats on the quarter. Thanks for taking the questions. Two for me. First, can you talk to the guidance? It looks like it's factoring in a somewhat lower fourth quarter than the street was expecting, and any early thoughts on 27, both top and bottom line? And you do have some tariff refunds to overcome, you know, strong order growth trailing 12 months. Can that translate into accelerating sales growth for next year? And then I have a follow-up. Thanks.

Hey, Robbie, thanks for the question. I'll start maybe just on the 27 piece and then toss it over to Bill to talk about implied Q4 the rest of the year. I mean, obviously, we'll give guide for 27 as we normally do out in February. But I would say, look, there's a lot of moving parts. The momentum you can see this year on Topline, we believe will continue. Both what you're seeing from an orders funnel, the translation of the backlog, how that's translating into revenue. So we feel good about the setup that we have moving into 27. And on the bottom line, it's a similar story. I think, you know, the majority of this year hasn't been heavily impacted by our new products that actually have higher gross margins. We'll see a higher percentage of that. We do have some scenarios on tariffs and stuff, which we're in a little bit better position. But I would caution the fact to say that, you know, there's no static tariff rates these days. We have to see how some of that plays out. But in the world that we see today, we're in pretty good shape. And then on variable cost, productivity, and price, we've been able to offset, you know, some of the major costs, not all of them, with the combination of the two. And I would expect all that, obviously, to play through into 27. Maybe, Bill, you can talk a little bit more about how we're thinking about the guide here for this year.

Yeah. No, thanks, Pete. Exiting the third quarter, I think we feel good about the momentum, right? We're building across the business. And heading into the fourth quarter, our backlog's up 12% versus the prior year. We had another solid quarter of top-line growth from an expectations perspective with healthy margin and EPS expansion, right, with margins coming in sequentially higher versus the third quarter. On the top-line, though, AIS and PDX will drive growth for us in Q4. As I said in the prepared remarks, PCS's growth will be muted a bit due to the product hold catch-up that we experienced last year, but they will grow sequentially and have healthy year-over-year margin expansion. So the implied Q4 growth range of that 3% to 4% is really more around the PCS product hold comp versus any deceleration we see in the market. So I think the guide appropriately reflects the strength we've seen while remaining mindful about the dynamic macro environment.

Great. Maybe a quick follow-up here. PCS had been trending pretty negatively year-to-date, had a really strong quarter here. How do we think about, you know, the underlying versus any one-time items, and if it is all underlying strength, what's driving that to shift so positively? Thanks a lot.

Yeah, Robbie, look, I think on PCS, and I'd mentioned this, you know, in some previous calls, we actually had some installations that had, timing-wise, moved out more to the second half on monitoring projects. That's playing out as we had thought. And so, again, those aren't one-time things. We're going to see that continue to play out through into the beginning and on through into 27. But one of the bigger challenges we had in Q1, Q2 is just some of the supplier issues. And the team has really doubled down using our management system heartbeat, again, to really focus on getting out with our suppliers where we've had supply constraints, How that ties out to demand capacity planning, both in our plants as well as with our customer sites. And I mentioned this focus on standard work and daily management. Think about it this way. I mean, this team has moved really from kind of a monthly weekly cadence to a weekly daily cadence and making sure that were there any gaps relative to product capabilities, if there's any issues relative to parts and components that they're addressed. And I think they've got the right rhythm in place. And so we would expect that you're going to see continued improvements here from this point forward on PCS. Appreciate it. Thanks.

Thank you. Our next question comes from the line of Joanne Wansch with Citi. Your line is now open.

Good morning. Thank you so much for taking the question. Bill, welcome to the GE Healthcare team. I'm curious what your first Impressions are, how you're thinking about what you may implement or view differently for guidance, and anything you feel like sharing with us now that you're here.

Yeah, no, I appreciate the question. So maybe if I started out with just, hey, what are the things that attracted me to GE Healthcare along with what I'm seeing, because I think they're fairly consistent. And there was a few things that I think were at the top of Mine is, one, I made the decision, and two, my observations through the first six weeks, and first off, it starts with the purpose and culture, right? The purpose of creating a world where healthcare has no limits is deeply embedded in how people make decisions here, right? And there's a clear connection between our innovation and the impact we have for patients and customers. That was really important to be part of an organization that was mission-focused, right? I see a lot of opportunities to improve patient outcomes and expand access to care at a global scale. And that's incredibly compelling and, I think, a huge opportunity for us. And I think the second thing is really around the growth opportunity. We've highlighted some things within our prepared remarks and some comments Pete has made, but I think we're at the forefront of healthcare innovation, right? We've got a strong technology portfolio and product pipeline. We've got this new phase of innovation that I think will be extremely impactful, leveraging our growing capabilities in AI and digital. We have this huge install base and really deep relationships with our customers. I think bringing all those things together creates a compelling opportunity for long-term growth. Then lastly, I think it's really around a meaningful opportunity for me to help partner with the teams on driving operating performance through Heartbeat. I've seen strong business systems really have a big impact on results within organizations, you know, where they have a desire to continuously improve and a willingness to try new things to continue to deliver for their customers, right, that philosophically, but I've also seen it in practice. So, right, the heartbeat methodology and the program that we have is increasingly embedded in how the teams operate here, and I think it's a further opportunity to continue to drive rigor and productivity and just general consistency along with a lot of things we do across the organization. And then maybe the last thing I'd say is just the quality of the leadership team. Obviously, there's a significant appreciation to partner with folks like Pete and the balance of the management team that's really committed to executing for our customers and this great opportunity to drive long-term shareholder value.

Thank you. Our next question comes from the line of Lawrence Beiglson with Wells Fargo. Your line is now open.

Good morning. Thanks for taking the question. Pete, two for me. One, OmniPake, it's an important product for you. You know a competitor is guiding to $50 million plus in generic, you know, OmniPake sales for next year. What share that do you think comes from GE Healthcare, and how does generic OmniPake, you know, impact your ability to grow PDX at a high single-digit rate, which is your midterm goal, and I had one follow-up.

Yeah, Larry, look, thanks for the question. You know, I'm not going to comment on maybe an entrance, just what their proposal of what they may do or not do. But again, just to remind you and others is that, you know, this is a generic market already. It's been for, you know, over 15 plus years. There's been, you know, a half dozen plus players that have been coming in and come out of the marketplace. And so, again, it's not as a first proprietary product with its first generic change coming in. That's not the dynamic we're dealing with here. We'll see how it ultimately plays out. This is a business that you need to actually have multiple SKUs. You need to have integration with injectors, all of those things that play out in the marketplace. But I do think one of the most important parts of this market right now today, capacity is maxed out. So if you take a look at demand, demand in many cases with supply is right at an equilibrium where in some quarters, some months, we're almost maximizing that out. So, I think an entrance that comes in that has some level of supply, it will be absorbed within the industry. You know, we're expecting this whole market to grow. We've mentioned this in previous sessions, almost 2x over the next, you know, 7 to 10 years. So, in a product like this, because it's interchangeable, not only with us, but with anybody else in the marketplace, it's going to fill the gap of the, you know, the opportunities that exist. So, you know, we believe they'll take a little bit of business. I think it will be from the broader marketplace, not just from a GE Healthcare, but we feel quite good about our positioning. And again, this isn't the first time that we've faced a generic player coming into the marketplace.

Yeah, just wanted to confirm PDX is still a high single-digit grower. And for my second question, new CFO here, hi, Bill. Nice to meet you. Are the midterm targets still intact, and how should we think about the past, your 28 goals in 27? Just asking Robbie's question a little bit differently. Thanks for taking the question.

Yeah, sure, Larry. I mean, look, on PDX, we feel quite good about its growth. You know, it's been growing double digits. The radiopharmaceutical side is growing significantly faster. That's going to continue based on all my previous comments, but we feel good about that. And look, on medium term, I'll comment and then maybe have Bill make a few comments. We continue to feel good about the medium term targets, full stop. I think on top line, you know, we're seeing strong progress here. We've talked about being a mid-single-digit grower. I think if you look at our trailing 12 months, we're roughly at 5%. That's mid-single digits. You saw it this quarter, Larry. And then on margin, you know, while the macroeconomic environment has created some headwinds for us, I think we've found space and oxygen in what we've been able to do with new platforms, cost productivity, and also price. So we feel good about both top and bottom line metrics in the midterm, which, again, we've defined by the 28 numbers. So, Bill, I don't know, maybe you want to add some comments.

I appreciate the question, Larry. So, hey, so relatively early in my tenure, but, you know, what I've seen so far gives me confidence in the direction we're headed. You know, to Pete's point on the growth side, I think the fundamental drivers of the market are strong. And we have this wave of new product introductions that are differentiated and customers are really excited about. Then on the margin side, right, I think there is the foundational elements there to progress on the margin aspirations that we have. You know, I think there's a big part of just leveraging the strong top line growth with better product mix with these new product introductions we have and then building the productivity engine through heartbeat and the benefits that a strong operating system has. And I'm looking forward to partnering with the teams on that, bringing some of the things out of my toolset to help kind of enhance the capabilities. I know that will be a huge driver of our gross margin improvements going forward.

Thanks so much.

Thank you. Our next question comes from the line of Ryan Zimmerman with U.S. Bank Corp BTIG. Your line is now open.

Good morning. Can you hear me okay?

Again, Ryan, good morning.

Good morning, and Bill, congrats. It's good to have you in Chicago, or it'd be all Brewer's talk, I think, on this call, so I appreciate that. There's always next year. Yeah, there's always next year for the Cubs, that's right. So just, you know, a couple questions for me. You know, first, there's been some dynamics in the imaging, in the general imaging ultrasound market, you know, Siemens pulling back a little bit, Philips having some recalls. Pete, you made some comments about ultrasound, your commitment to it. Remind us what the opportunity is for GE Healthcare, and do you see maybe some near-term benefit from the disruptions that are occurring in that segment of the market?

Yeah, Ryan, look, to your point, I mentioned this on the call, general ultrasound, you know, imaging ultrasound is a super important market for us. It's an important market in the U.S., but it's actually a growing market around the world. Multipurpose capabilities, Southeast Asia, Latin America, we see this in Eastern Europe as well. It's an entree into multiple use that then moves into specialization. And actually having those products that way is critical. For us, this is a big business. In many cases, I understand while some people made decisions where they are, we're actually quite formidable in the space. It's a critical platform for us globally. And so, you know, as a result of that, we've continued to invest. When you hear the brand name Logic, which is the most well-known brand in general imaging around the world, it has been a, you know, significant winner, I'd say, in the space. As we talk to customers, obviously, when you have a fleet of products, you want to be able to grow on it and build it over years. We think there will be some opportunities that will, you know, play out for us ultimately. But this, again, has been one of our strong suits for many, many years. And the platforming work that Phil and the team have done in ultrasound that leverages cost but productivity, this also will benefit across this platform. So, you know, we think it's a great business, and you're going to see us continue to invest and take advantage of what market opportunities arise.

Understood. And maybe, you know, turning to tariffs and margins, I appreciate your comments, you know, as I think about next year's numbers, and again, appreciating that we're not going to get guidance, but the street is not assuming really a whole lot of margin expansion on the gross margin line for next year. In fact, it's roughly flat. And so, you know, Bill, this isn't water filtration, but it still has the same, you know, impact on, you know, there is still tariffs to deal with. And so, you know, I'm wondering if you'd kind of elaborate on kind of what the dynamics are from a tariff standpoint, how you think about that impact for next year. You know, I know Robbie called out the tariff refund headwind, but certainly there's still a tariff component to consider as we think about next year. And, you know, frankly, can we see margins expand in 27? Appreciate it.

Thank you. You know, Ryan, maybe I'll start and then maybe have George here just kind of reconcile what we said for this year. And then, Bill, if you want to jump in, just commentary for next year. I think that would make some sense. But, you know, look, obviously on the whole tariff piece on guide, as I mentioned, we'll talk more about that, you know, as we get into our 27 guide window. But, you know, we're, you know, regarding the biggest uncertain thing on tariffs out there is what happens with Section 232. That's the, you know, probably the biggest swing item out there. I'm assuming we'll probably hear more this year about how that plays out. We've been planning as though, you know, those will be increased rates at some level. And so what does that mean? We're preparing for price. We're preparing for cost productivity. We've actually moved components, as we've talked about. We've moved certain systems, scenarios to countries to be able to offset some of that. So, you know, our focus is how things play out. We want to make the right actions and take the right actions to still be able to have an accretive model. I mean, that's part of our plan that we're going in there. George, you may want to comment just on what we stated here in the quarter and how to think about it.

Yeah, sure. So, you know, in third quarter, our tariffs are down year over year. You know, that's a result of a couple of things. One is the mitigation actions that the team has been driving. Secondly, is just the lower overall rates that we're seeing. And then there was about $4 million of IEPA tariff refunds related to 2026 that we recognized in the quarter. You know, consistent with how we treated this in 2Q26, we did adjust out about $9 million of refunds related to 2025. And Bill, do you want to comment on?

Yeah, I mean, to your point about next year, obviously, between tariffs and inflation, I think both are going to be persistent. So assuming kind of a steady state to where we're at at current levels, I think we feel good about our ability to mitigate those actions through the team's ability to get increased pricing, continue to build our capabilities. And then a significant amount of supply chain actions, you know, where we've done things internally and then partnered with key suppliers to minimize some of the volatility and reduce our exposure. So, obviously, we'll give you more context when we come out in 2027. But overall, understand, you know, it's an issue, but confident in the team's ability to mitigate it.

Thank you. Appreciate it.

Thank you. Our next question comes from the line of Jason Bidnar with Piper Sandler. Your line is now open.

Morning. Thanks for taking the questions. Pete, you and the team have been talking about realizing price to a greater degree. That's been a clear part of the strategy. Can you talk about where you're at in this journey of capturing price, and are you finding even more headroom here real-time on pricing as a result of passing through inflationary pressures that you're experiencing?

Yeah, Jason. Look, I mean, pricing is always tough in this business, you know, mainly because obviously our customers run at very low margins. We're sensitive to that. We try to make sure we look at all of the things around the edges first. And so, obviously, there's been some cases here where we've had to take actual list price or price increases on certain products. We do that selectively. I think, you know, an important aspect of our whole NPI process is, you know, does a product bring really differentiated productivity and outcomes for a customer? And when those match up, you know, paying more for price that you're going to see threefold in productivity changes in a world where you have employee shortages and in a world where you're really looking for productivity, that's really the matchup that we go for. And, you know, we've got quite a few new products coming out that hit that mark. And so that's probably the top piece. You know, we focused our incentives with our sales force to make sure that we obviously get volume, but we get volume with the right level of margins and price, and we've leaned in more to that most recently. I would also say just, you know, thinking about configuration management is a big deal here, and I think you appreciate in capital equipment when you have many different options and stuff, getting the right configs and the right plays in there. All of those things are playing out. But, again, you know, pricing in general in our world is a good pricing outcome as a 1% to 2% window, and I think those are, you know, a lot of the efforts that have been in place across the board. All right. Thank you.

And then just a follow-up. Historically, Pete, I think you've usually had a certain portion of the current and future quarter already spoken for with equipment installed and install schedules. Can you help with where you're at relative to historical averages, both for the current fourth quarter and as you look at that install schedule as you line up for 2027?

Yeah, I mean, it starts with Jason having a record backlog. You know, we obviously ate in a little bit this quarter, but I think year-to-date we're up over a couple billion dollars. So, I mean, that's a tremendous asset for us. And so, as you look out into 27, even into 28, we have delivery dates that match up into that. You know, if I were to say Q4 versus Q3, we're right in the same normal range that we would be, which is a high secured rate, meaning how much new business do you actually have to sell within the quarter to make your numbers? The vast, vast majority of it is already on orders that we've taken. We've validated that the site is ready. We're working with the customer because they want the equipment. So it's very much in line to what we had spoken about in Q3. All right. Very helpful. Thank you. Thank you.

Our next question comes from the line of Vic Chopra with BMO Capital Markets. Your line is now open.

Oh, hey, good morning, and thanks for taking the question. Bill, welcome. Looking forward to working with you. And maybe just the first question, on PCS, does that leadership change that you called out in the press release this morning, does that impact the timeline of the strategic review, and could it delay a decision? And then I had a quick follow-up, please.

Yeah, no, thanks for the question. The short answer is no, it does not. Look, we're very happy, actually, for Jeanette. Public company CEO jobs don't come around that often. We're happy for it because it's not competitive with us. That makes us even more happy. But as I mentioned, the critical number two leader who's stepping into the role, Neil, knows this business extremely well, has been heavily involved in actually leading much of the work around the strategic assessment, so there's no impact relative to how we're thinking about things or the impact of the recovery work. I mean, Neil's been deep into that as well.

Okay, great. And then one on Sophie for me, I think they already manufacture Fercado. I'm just curious if owning Sophie speeds up the ramp. And can you disclose what percent of Fercado doses it supplies today? Thanks.

Yeah, I won't disclose for competitive reasons the percentage, but I think you can appreciate we're pretty well distributed and spread out across multiple players based on how this works. But it's a good question. I mean, look, I would just say part of the really exciting part about radiopharmaceuticals, there's many ways to play across the ecosystem and participate in revenue that's accretive and margins that are accretive to GE healthcare. And so, you know, I would think less about Sophie as terms of the flaccato ramp, although it has the potential to benefit us in more of the terms of this broader opportunity that we see across the board. And again, having, owning some of your manufacturing base in most scenarios is obviously a positive thing, particularly in radiopharmaceuticals. We believe it's a very important aspect. Think about the pipeline of the future of therapeutics as well as diagnostics. I believe there's over 500 molecules in development as we speak. So that's an exciting opportunity. And, you know, Radio Pharma is different than traditional pharmaceuticals because these tracers have short half-lives, meaning by the end of the day, they're gone. And so you can't simply manufacture them centrally and hold inventory for extended periods. You need to make it every day. So now we're deeper into that process, which clearly helps us control more of our supply chain, but it also allows us to participate. You know, we're going to be dependent and working with other CMOs for a very long period of time. This just gives us more, you know, ownership and integration to play a significant role within that channel. So we're excited about it. Obviously, we need to get the deal closed, but that's part of the strategy of why we're so interested, Sophie.

Thank you. That concludes the question and answer session. Please proceed with any closing remarks.

Yeah, thank you, Operator, and I thank all of our investors for your interest in GE Healthcare. We're looking forward to seeing many of you at the Radiological Society of North America in Chicago, known as RSNA. I think you're going to see lots of our new products in phase, so we're hoping that many of you can join us. Also, we're going to be showcasing significant amounts of new AI-enabled products integrated at a departmental level, integrated at a hospital level. Many of the things that we've talked about, D3 in action, you're going to see live actually on the floor, so we're super excited about it. You know, this RSNA is a really pivotal window for us for many of those new products that will impact our growth profile and profit profile in 27 and 28. So with that, we'll conclude our call. Thank you very much.

This concludes today's conference. Thank you for your participation. You may now disconnect.