AI Takeaway
GE HealthCare reported Q1 2026 revenue of $5.13B (+7.4% YoY), but profitability deteriorated sharply with net income falling 31% to $389M, driven by gross margin compression of ~360 bps and a surge in investing cash outflows reflecting significant acquisition activity.
Revenue
$5.13B
++7.41% YoY
EPS (Basic)
$0.85
-30.89% YoY
Gross Margin
38.5%
-3.59% YoY
Operating Income
$515M
-18.12% YoY
Filed · Source: SEC EDGAR 10-Q filing
Revenue grew 7.4% YoY to $5.13B in Q1 2026 from $4.78B in Q1 2025, indicating continued demand for GEHC's medical imaging, ultrasound, and patient care solutions despite a challenging macro environment.
Source: Source: 10-Q Income Statement
Gross margin declined approximately 360 basis points YoY to 38.5% from 42.1%, with gross profit falling $35M despite higher revenues, suggesting significant cost of goods sold inflation, unfavorable product mix, or tariff-related headwinds impacting manufacturing costs.
Source: Source: 10-Q Income Statement
Operating income fell 18.1% to $515M and net income dropped 31.0% to $389M, with SG&A expenses rising 7.4% to $1.12B in line with revenue growth, while the steeper net income decline points to higher interest or other below-the-line costs associated with increased long-term debt.
Source: Source: 10-Q Income Statement & Balance Sheet
2 more insights available
Upgrade to unlockGross margin compressed by approximately 360 bps to 38.5% in Q1 2026, with gross profit declining $35M despite a $354M revenue increase. If cost pressures from supply chain disruptions, tariffs, or unfavorable product mix persist, profitability could continue to erode even with top-line growth.
Source: Source: 10-Q Income Statement
Unlock 4 more detailed risk analysis
Upgrade to unlockReported EPS of $0.99 versus the $1.07 analyst consensus — a -7.5% miss for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $5.13B | $4.78B | +7.41% |
Gross Profit | $1.98B | $2.01B | -1.74% |
Operating Income | $515M | $629M | -18.12% |
Net Income | $389M | $564M | -31.03% |
EPS (Basic) | $0.85 | $1.23 | -30.89% |
EPS (Diluted) | $0.85 | $1.23 | -30.89% |
R&D Expense | $345M | $344M | +0.29% |
SG&A Expense | $1.12B | $1.04B | +7.40% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $37.13B | $33.59B | +10.54% |
Current Assets | $10.43B | $9.73B | +7.10% |
Total Liabilities | $26.23B | $24.17B | +8.52% |
Current Liabilities | $8.53B | $9.97B | -14.44% |
Stockholders' Equity | $10.67B | $9.19B | +16.12% |
Cash & Equivalents | $2.26B | $2.45B | -7.86% |
Long-Term Debt | $10.13B | $8.76B | +15.70% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $290M | $250M | +16.00% |
Investing Cash Flow | $-2.5B | $-407M | -514.25% |
Financing Cash Flow | $21M | $-286M | +107.34% |
Dividends Paid | $16M | $16M | 0.00% |
Share Buybacks | $100M | $0 | — |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 38.5% | 42.1% | -3.59% |
Operating Margin | 10.0% | 13.2% | -3.13% |
Net Margin | 7.6% | — | — |
ROE | 3.6% | — | — |
ROA | 1.0% | — | — |
Current Ratio | $1.222 | — | — |
Debt to Equity | $2.458 | — | — |
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GEHC reported Q1 2026 revenue of $5.13B, up 7.4% YoY, but net income fell sharply by 31% to $389M and EPS declined to $0.85 from $1.23 a year ago. The earnings miss relative to prior-year levels was driven by gross margin compression of ~360 bps and higher costs associated with increased debt.
Despite revenue growing 7.4% to $5.13B, gross profit actually declined 1.7% to $1.98B because costs rose faster than revenues, compressing gross margin from 42.1% to 38.5%. Additionally, long-term debt rose 15.7% to $10.13B, likely increasing interest expense and further reducing net income to $389M.
The financial data strongly suggests a major acquisition occurred in Q1 2026, as investing cash outflows surged to -$2.50B from just -$407M in Q1 2025, a change of over 500%. This was accompanied by a $1.375B increase in long-term debt to $10.13B, consistent with acquisition financing.
GEHC's balance sheet shows total assets of $37.1B and stockholders' equity of $10.67B, but the debt-to-equity ratio is elevated at 2.46x with long-term debt of $10.13B. The current ratio of 1.22x provides adequate near-term liquidity, though cash declined 7.9% YoY to $2.26B.
The three most significant risks highlighted by the Q1 2026 data are: gross margin compression (down ~360 bps to 38.5%) that is eroding profitability despite revenue growth; elevated leverage with debt-to-equity at 2.46x following what appears to be a major acquisition; and integration execution risk associated with the ~$2.5B in investing outflows this quarter.