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Disappointing 3Q17 Results Force General Electric to Cut Guidance

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Part 6
Disappointing 3Q17 Results Force General Electric to Cut Guidance PART 6 OF 10

Why General Electric Saw Higher Healthcare Revenues in 3Q17

General Electric: Healthcare revenues in 3Q17

In 3Q17, General Electric’s (GE) Healthcare segment improved compared to 3Q16. This vertical is the fourth-highest contributor to GE’s total operating revenues of $30.0 billion. The division accounted for 15.7% of GE’s total Industrial segment’s revenues in 3Q17.

Healthcare revenues reached $4.7 billion in 3Q17, up 5% from ~$4.5 billion in 3Q16. Increases of 4% and 10% in its Healthcare Systems and Life Sciences revenues, respectively, pushed the Healthcare segment’s revenue upward in 3Q17.

Why General Electric Saw Higher Healthcare Revenues in 3Q17

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The vertical’s operating profit rose 14% in 3Q17 to $820.0 million from $717.0 million in 3Q16. Notably, General Electric witnessed a rise of 140 basis points in the Healthcare (PFE) segment’s operating margin from 16% in 3Q16 to 17.4%.

Healthcare orders in 3Q17

In 3Q17, GE’s Healthcare (MRK) orders rose 6% to $5.1 billion compared with 3Q16. Territory-wise, US organic orders grew 4% while its Europe orders were up 8%. China dominated the 11% rise in emerging market orders with 20% order growth in 3Q17.

We’ll look into the product-wise orders in the Healthcare (IYH) segment in 3Q17, as Healthcare system orders expanded 5%. This increase was due to 11% and 8% higher orders in its Ultrasound and Imaging businesses, respectively, led by solid growth in Mammography and CT. 

GE’s Life Sciences orders registered 14% growth, due to 17% growth in its Bioprocess business and a 9% rise in its Core Imaging business.

Management outlook

General Electric launched a first in the healthcare (JNJ) industry, a patient-assisted mammography device. This device allows patients to control their own compressions. The company also announced the ten-year collaboration with Partners Healthcare to develop artificial intelligence medical platforms and solutions. 

GE established an eight-year risk-sharing relationship with Jefferson. The company anticipates low- to mid-single-digit revenue increases in the Healthcare segment in 4Q17.

Next, we’ll cover GE’s Transportation segment’s 3Q17 results.

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