GE HealthCare Technologies Inc. Common Stock Wells Fargo 21st Annual Healthcare Conference

Thanks for having us, Larry.

Look, Larry, I think, Q2 was obviously a strong quarter, to your point, over 11% growth. I want to clarify something, though, is that that was all equipment and orders coming through. The backlog that grew to 2.1, the vast majority of that still doesn't come through orders. The way we recognize service is it will capture a large contract, it will go into the backlog, and then as it's consumed, portions of that will come through. Again, big backlog build and 11% orders growth within the quarter. It was quite good. Look, I think underlying that, the markets are strong. We're seeing still a lot of long waits to get scans. Some of that's driven by the need for many of our modalities now to be prepared for drug therapy or device therapy, and so that's been driving it.

The other aspect is we are now bringing out more and more new products, and those new products are obviously driving some of the growth. It was obviously, definitely a good one, and we feel very good about what that means now for Q3 and Q4.

Yeah. Some of the Q2 orders will come through, but particularly in what was traditionally the previous ultrasound business, we will see those come through. But some of the long cycle items will come out more so of the backlog as we take a look in the second half of the year. Our ramp up is the traditional setup is we typically have a stronger back half just based on hospital budgets and stuff, and so the ratios look quite good. They are relatively favorable. To give you an idea, coming into third quarter, we actually had a higher percentage of the actual revenue committed, which basically means the site has their site readiness, we verified it, we have got the configuration, we have made the product. So we were pushing 80% coming in. So we feel quite good about what that looks like.

Because of our backlog, because of the ramp, we have got good visibility into Q4. So feel quite good about that ability for the acceleration and what it means here for 2026 finish.

George, you want to take it?

Yeah, sure. So look, traditionally, historically, we've had about 250 basis points lift in margins second half versus first half. As you think about the drivers there, with the NPIs. So a lot of new products coming out. We've got traditional productivity that we do. We've got price. We've got PDX, which continues to be strong for us, and then we've got the PCS recovery. So maybe thinking about that a little bit further, with the NPIs, each of the products that are coming out now have a better margin than their predicate product. And as they start to mix into our revenue, then our margins will go up. On our productivity, we've got sourcing initiatives. We've got manufacturing initiatives. We have, overall, we announced earlier this year, the combination of our AVS and our imaging platforms. We should get productivity from that over time.

Similarly, with our commercial, we merged some of our commercial groups together. We should get synergies there. As you think about price, we got a little bit of price in the second quarter. As we reprice the orders that we are taking now, we'll start to see that come through. PDX continues to be a strong part of our business. And obviously, it's our highest margin business. And then lastly, look, we had a rough first half with PCS. We had some supply chain issues. We had some supplier issues. As we start to push that out into the second half, we should see a recovery there, and that should also be- Yeah a margin lift.

You kind of package all that together. That's why we see the second half margin.