Here's Why GE Healthcare Shares Popped Higher Today
Cost increases have hit the company in 2026, but today's earnings report provides evidence of an oncoming improvement.
Overview
Shares in GE Healthcare (NASDAQ: GEHC) were higher by 12% at around 11 a.m. today on the back of its second-quarter earnings report. It's been a difficult year for the company, but the latest results, particularly the order book, are signaling an improvement ahead. Here's why.
The second-quarter earnings came in ahead of expectations. Still, management reiterated its previous full-year guidance: organic revenue growth of 3%-4%, adjusted EPS of $4.80-$5.00, and free cash flow (FCF) of approximately $1.6 billion.It's superficially unimpressive, but the devil is in the detail of the order book, and specifically the 11.1% growth in orders, taking its book-to-bill ratio to 1.15 times, and its backlog to $23.9 billion.
Details
To understand why this is so important, you have to go back to the first-quarter results, when management was forced to lower its full-year earnings guidance on the back of a $250 million increase in costs from memory chips, oil, freight, and raw materials. The cost increase is problematic for a company like GE Healthcare, which has relatively long sales cycles, because it can't react quickly to raise prices and has to work through a backlog secured at prices before the cost inflation hit.
Source
Originally published at www.fool.com.