GE HealthCare has cut its organic revenue growth for 2024, as China’s anti-corruption campaign continues to impact the medtech procurement sector.
Shares in the Nasdaq-listed company slid 10% due to the Q2 earnings report, which saw revenue growth for the year cut from 4% to a range of 1%-2%.
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GE HealthCare had accepted earlier this year that negative sales growth would occur in China due to the region’s anti-corruption drive. The Chinese Government cracked down on corrupt clinicians and senior hospital staff involved in medical equipment and drug procurement in July 2023. The result was a near-freeze in health sector sales that sent financial shockwaves through the industry.
GE HealthCare had expected to see positive sales growth in the second half of the year, but the prolonged rollout of the stimulus is still “impacting the timing of order and sales”, CEO Peter Arduini said in a call to investors.
“We expect a continued sales decline in China year over year in the second half [of 2024],” Arduini added.
A majority of GE HealthCare’s revenue in China comes from the sales of imaging devices and ultrasound technology. Global imaging revenue was down 1% from the same period last year, with ultrasound revenue down by 2%.
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By GlobalDataArduini said that the company anticipates growth in China will be negative for the year.
GE HealthCare’s revenue was flat year-over-year, notching up $4.8bn.
On the same day GE HealthCare announced its impacted earnings, fellow medtech giant Siemens Healthineers also felt the effects of the China headwinds. The German company reported lower-than-expected sales due to the anti-corruption campaign. Shares in the company also slid.
Like GE HealthCare, Siemens had expected the medical device demand to pick up this year, with chief financial officer Jochen Schmitz stating last November that the freeze was “relaxing”. Similar to other health companies, however, the prolonged clampdown on procurement of equipment and drugs has impacted sales.
