GE HealthCare Lowers 2024 Revenue Growth Forecast Due to Challenges in China, Reports Reuters

GE HealthCare has lowered its revenue growth forecast for the year, citing a slowdown in China’s healthcare sector due to an anti-corruption initiative that has adversely affected sales of its imaging and medical equipment. This announcement resulted in a 10% drop in the company’s stock price.

The Chinese government initiated a year-long crackdown on the healthcare sector in July of the previous year, focusing on curbing bribery practices involving medical professionals in the sales of drugs and medical devices. This campaign has created uncertainty in the industry and negatively impacted healthcare stocks.

GE HealthCare indicated that the ongoing anti-corruption campaign, coupled with delays in a stimulus planned for 2024 in China, may lead to continued declines in sales and orders in the short term. However, the company noted that it is unable to accurately forecast the duration or extent of these impacts.

A significant portion of GE HealthCare’s revenue derives from the sales of ultrasound and imaging devices in China, which accounted for 14.2% of the company’s total revenue in 2023. In the second quarter, sales in China fell by 18.3%, reaching $583 million compared to the same period last year.

Additionally, Merck has reported that the anti-corruption campaign is also affecting the sales of its Gardasil vaccine, which is used to prevent cancers caused by human papillomavirus.

Overall, GE HealthCare’s total revenue for the quarter was $4.84 billion, which fell short of analysts’ expectations, which averaged around $4.87 billion.

In response to the challenges, the Chicago-based company has revised its forecast for organic sales growth, adjusting it down to a range of 1% to 2%, a significant decrease from the previously anticipated growth of about 4%.

On a more positive note, GE HealthCare reported adjusted earnings of $1 per share for the second quarter, exceeding Wall Street estimates of 98 cents per share.