GE HealthCare cut its year-end revenue growth estimates, citing headwinds in the Chinese market — but executives pointed to potential U.S. regulatory changes as reasons for optimism.
Proposed Centers for Medicare and Medicaid Services reimbursement updates could help GE HealthCare's business lines, especially regarding products often used for cancer, cardiovascular problems and neurological disorders, said President and CEO Peter Arduini on the company's second-quarter earnings call Wednesday.
Related: GE HealthCare’s challenges in China hamper Q1
Under the current framework, CMS reimburses diagnostic radiopharmaceuticals — molecular imaging agents used to enable precise treatment plans for patients — as part of imaging exams. The proposed hospital outpatient payment rule issued earlier this month would reimburse hospitals separately for the radiopharmaceuticals in some circumstances.
GE HealthCare manufactures and sells seven such agents to providers and therapeutic researchers. Arduini said diagnostic radiopharmaceuticals generally haven't been worth the investment for hospitals.
“The change will give hospitals the needed reimbursement to cover their costs better, which has been a long-standing challenge in this space,” Arduini said.
CMS' proposal, if finalized, would go into effect Jan 1.
Arduini said the company is also optimistic about its investments in artificial intelligence. In July, GE HealthCare acquired the AI division of Intelligent Ultrasound, a developer of AI tools. It also announced a collaboration with Amazon Web Services on Friday.
However, GE HealthCare said challenges in the Chinese market carried over from the first quarter and will have an effect on the rest of 2024. The company cut its year-end revenue estimates to 1-2% organic growth from 4% growth as it anticipates a continuing decline in Chinese sales. The Chinese government's economic stimulus package is taking longer to roll out than GE HealthCare expected, Arduini said.
The medical device company posted second-quarter net income of $428 million, or 93 cents per share, compared with $418 million, or 91 cents per share, in 2023. Its revenue of $4.8 billion saw no change from the year-ago period.
GE Healthcare's shares were trading at $85.07 Wednesday morning, up 6% from its Tuesday close of $80.10.
