GE HealthCare reports positive second quarter and minimal tariff impacts
Despite the roller coaster ride of U.S. tariffs, reciprocal tariffs and several back-and-forth shifts in changing U.S. trade policy under the Trump administration, healthcare vendors appear to be riding out the storm.
GE HealthCare this week announced its second quarter (Q2) earnings report, which showed revenue growth was 3% year-over-year. There were concerns about the impact of tariffs when its Q1 report released April 30, but GE reported $4.8 million in revenue and minimal impacts from tariffs, partly due to ongoing tariff mitigation efforts. In Q2 the company is reporting $5 billion in revenue.
“We were pleased with solid orders and revenue performance in the second quarter across all segments, reflecting healthy customer investment in capital equipment. We also reported strong earnings performance while leveraging our lean capabilities and demonstrating progress on tariff mitigation. Overall, we believe we are driving long-term value through our strategic priorities and are well positioned operationally,” explained GE HealthCare President and CEO Peter Arduini in a statement.
Tariff impacts on GE HealthCare
"We are pleased that the global tariff environment has become clearer since our last earnings call. We made significant progress implementing mitigating actions," explained GE HealthCare Vice President and CFO Jay Saccaro in the Q2 earnings call.
He said there is a better understanding of what the true tariff rates will be in the coming months, which helps enable better financial estimates. He said the gross impact of tariffs in 2025 was projected in Q1 to impact on GE HeathCare stock earnings per share (EPS) by about $1.1 billion, but the new projections put them at a lower impact of about $550 million.
This is partly due to the net reduction in tariff exposure from bilateral U.S. and China tariffs by 75% to 50% from the rates earlier this year.
GE has been working on tariff mitigation actions since April to lower its tariff profile on products. Scott said the company has now mitigated about 50% of gross tariff costs. This includes United States-Mexico-Canada Agreement (USMCA) certification for tariff exemptions now completed on 75% of eligible imports with the goal of getting closer to 100%. The company is also leveraging duty drawback programs, free trade zones and bonded logistics to lower tariff costs. It is also working on dual sourcing of materials and components to avoid tariffs for products made in the U.S. and at its factories elsewhere in the world where reciprocal tariffs on U.S. goods will now be in place. GE said this includes manufacturing shifts.
Scott expects 2026 tariff expenses on stock shares to be below the forecasted 2025 level of $0.45. This will be accomplished through the multi-sourcing of its factories and suppliers by region and selective price increases.
Tariff rates might be stabilizing
Projections of costs due to tariffs for the rest of the year are largely based on what the currently agreed upon rates are assumed to be. New tariff rates kick in on Aug. 1 and 12:
• Bilateral U.S. and China tariffs introduced this year continue and will rise on Aug. 12 to a rate of 54% for U.S. tariffs imposed on goods imported from China to the U.S., and to 34% for Chinese tariffs on goods exported from the U.S. to China.
• U.S. tariffs on European Union (EU) and Japanese products will be 15% effective Aug. 1.
• Tariffs increase for goods imported from Mexico to 30%, and from Canada to 35% on Aug. 1, but USMCA exemptions for eligible imports will continue.
• U.S. reciprocal tariffs on all other impacted geographies return to pre-pause levels on Aug. 1, 2025. This includes increases 10% or more.
Chinese healthcare market is important as second largest
The large U.S. tariffs placed on China and the reciprocal Chinese tariffs on U.S. goods will have an impact on GE products. China is a large manufacturing hub for GE HealthCare system components and the company views China as the second largest healthcare market in the world after the United States, so it is important for the company to maintain a presence there. GE also exports a large volume of U.S.-made goods to China, so the company is getting penalized in both directions in the trade war.
Though the additionally imposed import taxes are unpleasant, the company said it is a better outlook than the prior 145% U.S. tariffs against Chinese-made goods, and the 125% Chinese tariffs on U.S. made goods earlier this year as the trade war escalated, before the Trump administration called for a pause for negotiating new rates.
GE HealthCare sees growth across it four product segments
Revenue growth was seen in all four of GE Healthcare's business segments. The biggest was 14% in its pharmaceutical diagnostics business, which focuses on contrast agents for CT, MRI and nuclear imaging radiopharmaceuticals.
“In the second quarter, we saw increased demand for our radiopharmaceutical products, including Vizamyl, Cerianna and Flyrcado, and we secured our largest-ever order of Omni Legend PET systems in the U.S.,” Arduini explained.
GE's imaging systems business was up 2%, advanced visualization solutions (which includes its intervention cath lab image guided therapies) was up 3%, and patient care solutions up 1%. The advanced visualization solutions segment was the largest earner in the quarter with $267 million in revenue, followed by $213 million of the pharmaceutical segment.
Arduini said a large amount of growth was seen in purchases for the out-patient cardiac and orthopedic settings
"Excluding tariffs, the imaging system segment margin would have increased year-over-year and sequentially," Scott explained.
In the advanced visualization segment, Scott said growth was largely driven by U.S. sales as customers continue to invest in artificial intelligence-enhanced ultrasound solutions across multiple types of care settings.
Stock earnings projected to be better than expected, despite tariff costs
The EPS for GE stocks was originally forecasted in Q1 to decline in the range of $3.90 to $4.10, with a tariff impact per share of 85 cents. This would have been a 9-14% decline year-over-year. However, with the easing of tariffs, GE projects the impact will now only be about 40 cents per share. This resulted in a positive adjustment in the range of $4.43 to $4.63, even with with a $0.45 per share tariff impact.
GE Healthcare stock prices were at $79.36 per share on the eve of President Trump's major tariff announcement April 2. After which, it dropped to a low of $59.75. In the months since it made a gradual rebound to a high of $77.72 July 29, and then dropped to a low of $64.24 as of Aug. 1 following the release of the Q2 earnings report.
Dave Fornell has covered healthcare for more than 17 years, with a focus in cardiology and radiology. Fornell is a 5-time winner of a Jesse H. Neal Award, the most prestigious editorial honors in the field of specialized journalism. The wins included best technical content, best use of social media and best COVID-19 coverage. Fornell was also a three-time Neal finalist for best range of work by a single author. He produces more than 100 editorial videos each year, most of them interviews with key opinion leaders in medicine. He also writes technical articles, covers key trends, conducts video hospital site visits, and is very involved with social media. E-mail: [email protected]