GE HealthCare Technologies Inc. (GEHC) saw its shares tumble nearly 13% on Wednesday after the medical equipment manufacturer lowered its 2026 profit forecast, citing a confluence of rising input costs and tariff pressures. The stock closed at $59.75, near its session low of $58.75, erasing billions in market value.
The company now expects full-year adjusted earnings of $4.80 to $5.00 per share, down from its prior range of $4.95 to $5.15. Management also trimmed its adjusted EBIT margin guidance to 15.4%-15.7%, compared with the earlier 15.8%-16.1% target. Organic revenue growth guidance remained unchanged at 3% to 4%.
First-quarter revenue rose 7.4% year-over-year to $5.13 billion, but net income attributable to GE HealthCare fell sharply to $389 million, or $0.85 per share, from $564 million, or $1.23 per share, a year earlier. Adjusted earnings came in at $0.99 per share, missing the $1.05 consensus estimate from analysts polled by LSEG.
CEO Peter Arduini pointed to "significant increases in memory chips, oil and freight costs" during the first quarter as the primary drivers behind the profit warning. The company plans to offset more than half of the inflationary impact through pricing actions and cost-cutting measures. CFO Jay Saccaro noted that some of the cost pressure was deferred due to inventory accounting methods, meaning the heaviest impact is likely to materialize later this year.
Tariffs also took a toll, with a hit of approximately $0.16 per share in the first quarter, which Saccaro described as the "largest quarterly hit this year." The company's 2026 outlook does not assume any recovery from pending tariff claims, adding further uncertainty.
In a strategic move to streamline operations, GE HealthCare announced a reorganization that merges its Imaging and Advanced Visualization Solutions units into a single $14.6 billion division called Advanced Imaging Solutions. Phil Rackliffe will lead the new segment, while Catherine Estrampes assumes the role of chief commercial and growth officer. Imaging CEO Roland Rott is departing the company.
The restructuring comes as GE HealthCare navigates a competitive landscape that includes heavyweights like Siemens Healthineers (SIEGY), Philips Healthcare, and United Imaging. According to the company's 2025 annual report, success in the med-tech sector depends on factors such as value, quality, performance, delivery times, service, software, and brand reputation.
Despite the headwinds, demand remains robust. The company reported positive orders and ended the quarter with a $21.8 billion backlog. However, investors are focused on whether that demand will translate into sustainable profitability as input costs remain elevated. Arduini framed the reorganization as part of a broader effort to "simplify how we operate" and set the stage for "margin acceleration in 2026 and beyond."
Risks persist, including trade rules, pricing pressure, and the potential for hospitals to delay large capital expenditures. If input costs do not ease soon, the margin recovery could take longer than executives anticipate. The company's revised guidance reflects a cautious stance amid an uncertain macroeconomic environment.
