GE Healthcare shows profit downturn in Q1

Fiscal 2008 first quarter segment profits took a dip on flat sales numbers for GE Healthcare. The company attributed the downturn to ongoing reimbursement and regulatory actions in the United States.

For the period, GE saw major equipment orders fall 1 percent compared with the first quarter of 2007. The company said this morning, during an earnings presentation to the investment community, that strength in Life Sciences and MR equipment orders were offset by a decline in CT system orders.

GE’s Services unit, including healthcare IT, saw an 8 percent increase in quarter-by-quarter comparison with the prior fiscal year, which demonstrates solid growth in this area following an 11 percent uptick for the fourth quarter of 2007, the company said.

GE Healthcare posted revenues of $3.887 billion for the period, essentially unchanged when compared with the same period last year. For the first three months of fiscal 2008, profit for the business segment stood at $528 million, a 17 percent decline, according to the company.

GE chairman and CEO Jeff Immelt acknowledged the struggles faced by GE Healthcare in the first quarter of 2008, but remained upbeat about future progress for the business segment.
“We like the healthcare business, over a long period of time it’s been a good performer,” he said during the morning conference call.

In related news, the firm’s OEC Medical Systems unit seems poised to begin shipments of its x-ray fluoroscopy devices following FDA action at plants in Lawrence, Mass., and Salt Lake City in 2006 and 2007. GE said that it expects OEC to ship this month.

Overall, the U.S. equipment market remains soft with diagnostic imaging equipment orders down 13 percent. Particularly troubling was an 18 percent decline in community hospital orders for March 2008, which the company attributes to the ongoing tightening in the financial credit market resulting in re-evaluation of capital expenditures.

On the global front, GE Healthcare saw diagnostic imaging revenues rise 8 percent; clinical systems grow 13 percent; and a strong 24 percent surge in growth from the Life Sciences Europe unit.

In addition, service revenues remain strong in the segment with diagnostic imaging service growing 9 percent for the period and clinical systems 25 percent. The firm said its service backlog for the quarter stood at $2.1 billion.