Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Part I. Financial Information
Index
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)			Page
Trends and Factors Impacting Our Performance			27
Summary of Key Performance Measures			28
Results of Operations			28
Results of Operations – Segments			31
Non-GAAP Financial Measures			32
Liquidity and Capital Resources			36
Recently Issued Accounting Pronouncements			37
Critical Accounting Estimates			37

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and corresponding notes included elsewhere in this Quarterly Report on Form 10-Q. The following discussion and analysis provide information management believes to be relevant to understanding the financial condition and results of operations of GE HealthCare Technologies Inc. and its subsidiaries (“GE HealthCare,” the “Company,” “our,” “us,” or “we”) for the three months ended March 31, 2024 and 2023. For a full understanding of our financial condition and results of operations, the below discussion should be read alongside the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. This discussion contains forward-looking statements that are based upon current expectations and are subject to uncertainty and changes in circumstances; see “Forward-Looking Statements.” Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed below and elsewhere in this Quarterly Report on Form 10-Q, and particularly in Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

The following tables are presented in millions of United States (“U.S.”) dollars unless otherwise stated, except for per-share amounts which are presented in U.S. dollars. Certain columns and rows throughout this document may not sum due to the use of rounded numbers. Percentages presented are calculated from the underlying whole-dollar amounts.

GE HealthCare’s operations are organized and managed through four reportable segments: Imaging, Ultrasound, Patient Care Solutions (“PCS”), and Pharmaceutical Diagnostics (“PDx”) and we evaluate their operating performance using Segment revenues and Segment EBIT.

TRENDS AND FACTORS IMPACTING OUR PERFORMANCE

We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and particularly in Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

KEY TRENDS AFFECTING RESULTS OF OPERATIONS.

Russia and Ukraine Conflict

We had $141 million and $153 million of assets in, or directly related to, Russia and Ukraine as of March 31, 2024 and December 31, 2023 respectively, none of which are subject to sanctions that impact the carrying value of the assets. We generated revenues of $77 million and $78 million from customers in these two countries for the three months ended March 31, 2024 and 2023, respectively. The potential inability to repatriate earnings from these two countries will not have a material impact on our ability to operate.

We continue to monitor the effects of Russia’s invasion of Ukraine, including the consideration of financial impact, cybersecurity risks, the applicability and effect of sanctions, and the employee base in Ukraine and Russia. In May 2023, the U.S. Department of Commerce implemented expanded measures that required us to obtain a license for the export, re-export, or transfer of specified medical equipment and spare parts to customers in Russia. As of April 29, 2024, this requirement has been modified to permit us to export, re-export, or transfer medical equipment and spare parts that meet stated criteria under a License Exception, which will eliminate the need for us to obtain individual U.S. licenses in most cases. The European Union and other countries have also expanded licensing requirements for certain spare parts, services, software, and other items. We will continue to apply for licenses to supply to these customers and to support our business in Russia, as required. The implementation of these measures affected our ability to supply customers in Russia during the first quarter of 2024 and the last three quarters of 2023 and will continue to do so as we confirm applicability of the new U.S. License Exception to our transactions and continue to obtain licenses. There is no guarantee we will obtain all of the licenses for which we applied, that any approvals we obtain will be on a timely basis, or that our business in Russia will not be further disrupted due to evolving legal or operational considerations. The Board, together with management, will continue to assess whether developments related to the conflict have had, or are reasonably likely to have, a material impact on the Company.

Tax Valuation Allowances

Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years. We evaluate the recoverability of these future tax deductions and credits by evaluating all available positive and negative evidence. We have a valuation allowance against certain U.S. and foreign deferred tax assets and will release the valuation allowance when there is sufficient positive evidence to support a conclusion that it is more likely than not the deferred tax assets will be realized. Depending on our operating results in the future, we may release the valuation allowance associated with our Brazil deferred tax assets within the next year. The timing and amount of the valuation allowance release could vary based on our assessment of all available evidence. Release of all, or a portion, of the valuation allowance would result in the recognition of certain deferred tax assets and may result in a decrease to income tax expense for the period in which the release is recorded.

SUMMARY OF KEY PERFORMANCE MEASURES

Management reviews and analyzes several key performance measures including Total revenues, Remaining performance obligations (“RPO”), Operating income, Net income attributable to GE HealthCare, Earnings per share, and Cash from (used for) operating activities. Management also reviews and analyzes Organic revenue*, Adjusted earnings before interest and taxes* (“Adjusted EBIT*”), Adjusted net income*, Adjusted tax expense*, Adjusted effective tax rate* (“Adjusted ETR*”), Adjusted earnings per share*, and Free cash flow*, which are non-GAAP financial measures. These measures are reviewed and analyzed in order to evaluate our business performance, identify trends affecting our business, allocate capital, and make strategic decisions, including those discussed below. See “Results of Operations” and “Liquidity and Capital Resources” below for further discussion on our key performance measures.

The non-GAAP financial measures should be considered along with the most directly comparable U.S. GAAP financial measures. Definitions of these non-GAAP financial measures, a discussion of why we believe they are useful to management and investors as well as certain of their limitations, and reconciliations to their most directly comparable U.S. GAAP financial measures are provided below under “Non-GAAP Financial Measures.”

RESULTS OF OPERATIONS

The following tables set forth our results of operations for each of the periods presented.

Condensed Consolidated Statements of Income
			For the three months ended March 31
			2024			2023
Sales of products			$	3,045		$	3,131
Sales of services			1,605			1,576
Total revenues			4,650			4,707
Cost of products			1,967			2,037
Cost of services			782			779
Gross profit			1,902			1,891
Selling, general, and administrative			1,038			1,062
Research and development			324			270
Total operating expenses			1,362			1,332
Operating income			540			559
Interest and other financial charges – net			122			136
Non-operating benefit (income) costs			(102)			(115)
Other (income) expense – net			8			(8)
Income before income taxes			512			546
Benefit (provision) for income taxes			(124)			(163)
Net income			388			383
Net (income) loss attributable to noncontrolling interests			(14)			(11)
Net income attributable to GE HealthCare			$	374		$	372

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*Non-GAAP Financial Measure

TOTAL REVENUES AND RPO.

Revenues by Segment
			For the three months ended March 31
			2024			2023			% change			% organic change*
Segment revenues
Imaging			$	2,466		$	2,496		(1)%			—%
Ultrasound			824			859			(4)%			(4)%
PCS			747			781			(4)%			(4)%
PDx			599			558			7%			8%
Other(1)			15			13
Total revenues			$	4,650		$	4,707		(1)%			—%

(1) Financial information not presented within the reportable segments, shown within the Other category, represents the HealthCare Financial Services business which does not meet the definition of an operating segment.

Revenues by Region
			For the three months ended March 31
			2024			2023			% change
United States and Canada (“USCAN”)			$	2,093		$	2,083		—%
Europe, the Middle East, and Africa (“EMEA”)			1,174			1,168			1%
China region			597			672			(11)%
Rest of World			785			784			—%
Total revenues			$	4,650		$	4,707		(1)%

For the three months ended March 31, 2024

Total revenues were $4,650 million, decreasing 1% or $57 million as reported and approximately flat organically*. The reported decline was primarily due to Sales of products decreasing 3% or $86 million, primarily due to decreased volume following double digit reported product revenue growth in the prior year, which benefited from improved supply chain fulfillment and COVID-related demand.

The segment revenues were as follows:

• Imaging segment revenues were $2,466 million, decreasing 1% or $30 million following double digit Organic revenue growth* in the prior year, which benefited from improved supply chain fulfillment, and unfavorable foreign currency impacts;

• Ultrasound segment revenues were $824 million, decreasing 4% or $35 million primarily due to decreased volume following double digit Organic revenue growth* in the prior year, which benefited from improved supply chain fulfillment and COVID-related stimulus programs;

• PCS segment revenues were $747 million, decreasing 4% or $34 million primarily due to decreased volume driven by in-quarter fulfillment delays and following double digit Organic revenue growth* in the prior year, which benefited from COVID-related demand in China; and

• PDx segment revenues were $599 million, growing 7% or $41 million with growth in the USCAN and EMEA regions driven by increased price, growth in volume, and new product introductions.

The regional revenues were as follows:

• USCAN revenues were $2,093 million, flat to the prior year with growth in PDx revenues largely offset by declines in other segment revenues, following high single digit growth in the prior year, which benefited from improved supply chain fulfillment;

• EMEA revenues were $1,174 million, growing 1% or $6 million with growth in PDx and Imaging revenues largely offset by decreases in PCS and Ultrasound revenues.

• China region revenues were $597 million, decreasing 11% or $75 million with declines in all segment revenues following double digit growth in the prior year due to the regional stimulus program; and

• Rest of World revenues were $785 million, flat to the prior year due to unfavorable foreign currency impacts offset by growth in Imaging revenues.

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*Non-GAAP Financial Measure

Remaining Performance Obligations
			As of
			March 31, 2024			December 31, 2023						% change
Products			$	4,742		$	4,930					(4)%
Services			9,570			9,725						(2)%
Total RPO			$	14,313		$	14,655					(2)%

RPO represents the estimated revenue expected from customer contracts that are partially or fully unperformed inclusive of amounts deferred in contract liabilities, excluding contracts, or portions thereof, that provide the customer with the ability to cancel or terminate without incurring a substantive penalty. RPO as of March 31, 2024 decreased 2% from December 31, 2023, primarily due to fulfillment and cancellations outpacing new contracts and renewals.

OPERATING INCOME, NET INCOME ATTRIBUTABLE TO GE HEALTHCARE, ADJUSTED EBIT, AND ADJUSTED NET INCOME.**

			For the three months ended March 31
			2024			% of Total revenues			2023			% of Total revenues			% change
Operating income			$	540		11.6%			$	559		11.9%			(3)%
Net income attributable to GE HealthCare			374			8.0%			372			7.9%			—%
Adjusted EBIT*			681			14.7%			664			14.1%			3%
Adjusted net income*			413			8.9%			388			8.2%			6%

For the three months ended March 31, 2024

Operating income was $540 million, a decrease of $19 million and 30 basis points as a percent of Total revenues. The decrease as a percent of Total revenues was due to the following factors:

• Gross profit increased $11 million or 70 basis points as a percent of Total revenues primarily due to a reduction in Cost of products sold. Cost of products sold decreased $70 million or 50 basis points as a percent of Sales of products. The decrease as a percent of sales was driven by cost productivity and an increase in pricing of our products, partially offset by cost inflation. Cost of services sold increased $3 million but decreased 70 basis points as a percent of Sales of services. The decrease as a percent of sales was driven by cost productivity and an increase in pricing of our service offerings, partially offset by cost inflation. Included in our total cost of revenue as part of our product investment was $101 million in engineering costs for design follow-through on new product introductions and product lifecycle maintenance subsequent to the initial product launch, compared to $110 million for the prior year comparable period; and

• Total operating expenses increased $30 million due to an increase in Research and Development (“R&D”) investments of $54 million, partially offset by a decrease in Selling, general, and administrative (“SG&A”) expense of $24 million primarily driven by corporate cost productivity, including Information Technology savings. As a result, R&D as a percentage of Total revenues increased by 120 basis points while SG&A as a percentage of Total revenues decreased by 20 basis points.

Net income attributable to GE HealthCare and Net income margin were $374 million and 8.0%, an increase of $2 million and 10 basis points, respectively, primarily due to the following factors:

*•*Operating income decreased $19 million, as discussed above;

• Interest and other financial charges – net decreased $14 million primarily driven by lower overall borrowings due to the repayments made on the Term Loan Facility;

• Non-operating benefit income decreased $13 million primarily related to lower amortization of net gains on our Pension Plans;

• Other income (expense) – net decreased $16 million primarily related to lower net financing and investment income; and

• Provision for income taxes decreased $39 million primarily due to prior year results impacted by an incremental charge for the accrual of withholding and other foreign taxes due upon future distribution of earnings. For additional detail regarding our income taxes, see Note 10, “Income Taxes” to the condensed consolidated financial statements.

Adjusted EBIT* and Adjusted EBIT margin* were $681 million and 14.7%, an increase of $17 million and 50 basis points, respectively, primarily due to a decrease in Total operating expenses, when excluding the impact of Restructuring and Spin-Off and separation costs.

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*Non-GAAP Financial Measure

Adjusted net income* was $413 million, an increase of $25 million primarily due to the decrease in Total operating expenses, when excluding the impact of Restructuring and Spin-Off and separation costs, and the decrease of Interest and other financial charges – net.

RESULTS OF OPERATIONS – SEGMENTS

We exclude from Segment EBIT certain corporate-related expenses and certain transactions or adjustments that our Chief Operating Decision Maker (which is our Chief Executive Officer) considers to be non-operational, such as Interest and other financial charges – net, Benefit (provision) for income taxes, Restructuring costs, Acquisition and disposition-related benefits (charges), Spin-Off and separation costs, Non-operating benefit (income) costs, Gain (loss) on business and asset dispositions, Amortization of acquisition-related intangible assets, Net (income) loss attributable to noncontrolling interests, Income (loss) from discontinued operations, net of taxes, and Investment revaluation gain (loss). See “Results of Operations” section above for discussion on the performance of segments on revenue.

Segment EBIT
			For the three months ended March 31
			2024			% of segment revenues			2023			% of segment revenues			% change
Segment EBIT(1)
Imaging			$	240		9.7		%	$	191		7.7		%	26		%
Ultrasound			182			22.1		%	207			24.1		%	(12)		%
PCS			81			10.9		%	109			14.0		%	(25)		%
PDx			178			29.7		%	155			27.8		%	15		%

(1)For additional details regarding Segment EBIT, see Note 3, “Segment Information.”

For the three months ended March 31, 2024

*•*Imaging Segment EBIT was $240 million, an increase of $49 million due to cost productivity and an increase in price, partially offset by cost inflation;

*•*Ultrasound Segment EBIT was $182 million, a decrease of $25 million due to cost inflation and a decrease in sales volume, partially offset by cost productivity;

*•*PCS Segment EBIT was $81 million, a decrease of $28 million due to cost inflation and a decrease in sales volume, partially offset by cost productivity; and

*•*PDx Segment EBIT was $178 million, an increase of $23 million due to an increase in price, cost productivity, and an increase in volume, partially offset by investments.

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*Non-GAAP Financial Measure

NON-GAAP FINANCIAL MEASURES

The non-GAAP financial measures presented in this Quarterly Report on Form 10-Q are supplemental measures of our performance and our liquidity that we believe help investors understand our financial condition, cash flows, and operating results, and assess our future prospects. We believe that presenting these non-GAAP financial measures, in addition to the corresponding U.S. GAAP financial measures, are important supplemental measures that exclude non-cash or other items that may not be indicative of or related to our core operating results and the overall health of our company. We believe that these non-GAAP financial measures provide investors greater transparency to the information used by management for its operational decision-making and allow investors to see our results “through the eyes of management.” We further believe that providing this information assists our investors in understanding our operating performance and the methodology used by management to evaluate and measure such performance. When read in conjunction with our U.S. GAAP results, these non-GAAP financial measures provide a baseline for analyzing trends in our underlying businesses and can be used by management as one basis for making financial, operational, and planning decisions. Finally, these measures are often used by analysts and other interested parties to evaluate companies in our industry.

The non-GAAP financial measures we report include:

Organic revenue and Organic revenue growth rate

We believe that Organic revenue and Organic revenue growth rate, by excluding the effect of acquisitions, dispositions, and foreign currency rate fluctuations, provide management and investors with additional understanding and visibility into the underlying revenue trends of our established, ongoing operations. Organic revenue and Organic revenue growth rate also provide greater insight regarding the overall demand for our products and services.

EBIT, Adjusted EBIT, and Adjusted EBIT margin

We believe Adjusted EBIT and Adjusted EBIT margin provide management and investors with additional understanding of our business by highlighting the results from ongoing operations and the underlying profitability factors. EBIT represents our earnings excluding interest expense, interest income, earnings (loss) attributable to non-controlling interests, non-operating benefit (income) costs, and tax expense. Adjusted EBIT additionally excludes non-recurring and/or non-cash items, which may have a material impact on our results. We may from time to time consider excluding other non-recurring items to enhance comparability between periods. We believe this provides additional insight into how our businesses are performing, on a normalized basis. However, Adjusted EBIT and Adjusted EBIT margin should not be construed as inferring that our future results will be unaffected by the items for which the measure adjusts.

Adjusted net income

We believe Adjusted net income provides investors with improved comparability of underlying operating results and a further understanding and additional transparency regarding how we evaluate our business. Adjusted net income also provides management and investors with additional perspective regarding the impact of certain significant items on our earnings. Adjusted net income excludes non-operating benefit (income) costs, certain tax expense adjustments, and non-recurring and/or non-cash items, which may have a material impact on our results. We may from time to time consider excluding other non-recurring items to enhance comparability between periods. However, Adjusted net income should not be construed as inferring that our future results will be unaffected by the items for which the measure adjusts.

Adjusted earnings per share

We believe Adjusted earnings per share provides investors with improved comparability of underlying operating results and a further understanding and additional transparency regarding how we evaluate our business. Adjusted earnings per share also provides management and investors with additional perspective regarding the impact of certain significant items on our per share earnings. Adjusted earnings per share excludes non-operating benefit (income) costs, certain tax expense adjustments, and non-recurring and/or non-cash items, which may have a material impact on our results. We may from time to time consider excluding other non-recurring items to enhance comparability between periods. However, Adjusted earnings per share should not be construed as inferring that our future results will be unaffected by the items for which the measure adjusts.

Adjusted tax expense and Adjusted effective tax rate

We believe that Adjusted tax expense and Adjusted effective tax rate provide investors with a better understanding of the normalized tax rate applicable to our business and provide more consistent comparability across periods. Adjusted tax expense excludes the income tax related to the pre-tax income adjustments included as part of Adjusted net income and certain income tax adjustments, such as adjustments to deferred tax assets or liabilities. We may from time to time consider excluding other non-recurring tax items to enhance comparability between periods. Adjusted effective tax rate is Adjusted tax expense divided by Income before income taxes less pre-tax income adjustments detailed above in Adjusted net income. However, Adjusted tax expense and Adjusted effective tax rate should not be construed as inferring that our future results will be unaffected by the items for which the measure adjusts.

Free cash flow

We believe that Free cash flow provides management and investors with an important measure of our ability to generate cash on a normalized basis. Free cash flow also provides insight into our flexibility to allocate capital, including reinvesting in the Company for future growth, paying down debt, paying dividends, and pursuing other opportunities that may enhance stockholder value. Free cash flow is Cash from (used for) operating activities including cash flows related to the additions and dispositions of property, plant, and equipment (“PP&E”) and internal-use software. Additionally, Free cash flow does not represent residual cash flows available for discretionary expenditures, due to the fact that the measures do not deduct the payments required for debt repayments.

Non-GAAP Reconciliations

Management recognizes that these non-GAAP financial measures have limitations, including that they may be calculated differently by other companies or may be used under different circumstances or for different purposes, thereby affecting their comparability from company to company. In order to compensate for these and the other limitations discussed below, management does not consider these measures in isolation from or as alternatives to the comparable financial measures determined in accordance with U.S. GAAP. Readers should review the reconciliations below and should not rely on any single financial measure to evaluate our business. The reconciliations of each non-GAAP financial measure to the most directly comparable U.S. GAAP financial measure are provided below.

Organic Revenue*			For the three months ended March 31
			2024			2023			% change
Imaging revenues			$	2,466		$	2,496		(1)%
Less: Acquisitions(1)			—			—
Less: Dispositions(2)			—			—
Less: Foreign currency exchange			(27)			—
Imaging Organic revenue*			$	2,493		$	2,496		—%
Ultrasound revenues			$	824		$	859		(4)%
Less: Acquisitions(1)			—			—
Less: Dispositions(2)			—			—
Less: Foreign currency exchange			(5)			—
Ultrasound Organic revenue*			$	829		$	859		(4)%
PCS revenues			$	747		$	781		(4)%
Less: Acquisitions(1)			—			—
Less: Dispositions(2)			—			—
Less: Foreign currency exchange			(1)			—
PCS Organic revenue*			$	748		$	781		(4)%
PDx revenues			$	599		$	558		7%
Less: Acquisitions(1)			—			—
Less: Dispositions(2)			—			—
Less: Foreign currency exchange			(1)			—
PDx Organic revenue*			$	600		$	558		8%
Other revenues			$	15		$	13		12%
Less: Acquisitions(1)			—			—
Less: Dispositions(2)			—			—
Less: Foreign currency exchange			—			—
Other Organic revenue*			$	14		$	13		11%
Total revenues			$	4,650		$	4,707		(1)%
Less: Acquisitions(1)			—			—
Less: Dispositions(2)			—			—
Less: Foreign currency exchange			(34)			—
Organic revenue*			$	4,684		$	4,707		—%

(1)			Represents revenues attributable to acquisitions from the date the Company completed the transaction through the end of four quarters following the transaction.
(2)			Represents revenues attributable to dispositions for the four quarters preceding the disposition date.

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*Non-GAAP Financial Measure

Adjusted EBIT*			For the three months ended March 31
			2024			2023			% change
Net income attributable to GE HealthCare			$	374		$	372		—%
Add: Interest and other financial charges – net			122			136
Add: Non-operating benefit (income) costs			(102)			(115)
Less: Benefit (provision) for income taxes			(124)			(163)
Less: Net (income) loss attributable to noncontrolling interests			(14)			(11)
EBIT*			$	531		$	567		(6)%
Add: Restructuring costs(1)			40			12
Add: Acquisition and disposition-related charges (benefits)(2)			—			1
Add: Spin-Off and separation costs(3)			60			58
Add: (Gain) loss on business and asset dispositions(4)			—			—
Add: Amortization of acquisition-related intangible assets			31			31
Add: Investment revaluation (gain) loss(5)			20			(5)
Adjusted EBIT*			$	681		$	664		3%
Net income margin			8.0%			7.9%			10 bps
Adjusted EBIT margin*			14.7%			14.1%			50 bps

(1)			Consists of severance, facility closures, and other charges associated with restructuring programs.
(2)			Consists of legal, consulting, and other transaction and integration fees, and adjustments to contingent consideration, as well as other purchase accounting related charges and other costs directly related to the transactions.
(3)			Costs incurred in the Spin-Off and separation from GE, including system implementations, audit and advisory fees, legal entity separation, Founders Grant equity awards, separation agreements with GE, and other one-time costs.
(4)			Consists of gains and losses resulting from the sale of assets and investments.
(5)			Primarily relates to valuation adjustments for equity investments.

Adjusted Net Income*			For the three months ended March 31
			2024			2023			% change
Net income attributable to GE HealthCare			$	374		$	372		—%
Add: Non-operating benefit (income) costs			(102)			(115)
Add: Restructuring costs(1)			40			12
Add: Acquisition and disposition-related charges (benefits)(2)			—			1
Add: Spin-Off and separation costs(3)			60			58
Add: (Gain) loss on business and asset dispositions(4)			—			—
Add: Amortization of acquisition-related intangible assets			31			31
Add: Investment revaluation (gain) loss(5)			20			(5)
Add: Tax effect of reconciling items			(9)			4
Add: Certain tax adjustments(6)			—			30
Adjusted net income*			$	413		$	388		6%

(1)			Consists of severance, facility closures, and other charges associated with restructuring programs.
(2)			Consists of legal, consulting, and other transaction and integration fees, and adjustments to contingent consideration, as well as other purchase accounting related charges and other costs directly related to the transactions.
(3)			Costs incurred in the Spin-Off and separation from GE, including system implementations, audit and advisory fees, legal entity separation, Founders Grant equity awards, separation agreements with GE, and other one-time costs.
(4)			Consists of gains and losses resulting from the sale of assets and investments.
(5)			Primarily relates to valuation adjustments for equity investments.
(6)			Consists of certain income tax adjustments, including the accrual of a deferred tax liability on the prior period earnings of certain of the Company’s foreign subsidiaries for which the Company is no longer permanently reinvested and the impact of adjusting deferred tax assets and liabilities to stand-alone GE HealthCare tax rates.

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*Non-GAAP Financial Measure

Adjusted Earnings Per Share*			For the three months ended March 31
(In dollars, except shares outstanding presented in millions)			2024			2023			$ change
Diluted earnings per share			$	0.81		$	0.41		$	0.40
Add: Deemed preferred stock dividend of redeemable noncontrolling interest			—			0.40
Add: Non-operating benefit (income) costs			(0.22)			(0.25)
Add: Restructuring costs(1)			0.09			0.03
Add: Acquisition and disposition-related charges (benefits)(2)			—			0.00
Add: Spin-Off and separation costs(3)			0.13			0.13
Add: (Gain) loss on business and asset dispositions(4)			—			—
Add: Amortization of acquisition-related intangible assets			0.07			0.07
Add: Investment revaluation (gain) loss(5)			0.04			(0.01)
Add: Tax effect of reconciling items			(0.02)			0.01
Add: Certain tax adjustments(6)			—			0.07
Adjusted earnings per share*			$	0.90		$	0.85		$	0.05
Diluted weighted-average shares outstanding			459			457

(1)			Consists of severance, facility closures, and other charges associated with restructuring programs.
(2)			Consists of legal, consulting, and other transaction and integration fees, and adjustments to contingent consideration, as well as other purchase accounting related charges and other costs directly related to the transactions.
(3)			Costs incurred in the Spin-Off and separation from GE, including system implementations, audit and advisory fees, legal entity separation, Founders Grant equity awards, separation agreements with GE, and other one-time costs.
(4)			Consists of gains and losses resulting from the sale of assets and investments.
(5)			Primarily relates to valuation adjustments for equity investments.
(6)			Consists of certain income tax adjustments, including the accrual of a deferred tax liability on the prior period earnings of certain of the Company’s foreign subsidiaries for which the Company is no longer permanently reinvested and the impact of adjusting deferred tax assets and liabilities to stand-alone GE HealthCare tax rates.

Adjusted Tax Expense and Adjusted ETR**			For the three months ended March 31
			2024			2023
Benefit (provision) for income taxes			$	(124)		$	(163)
Add: Tax effect of reconciling items			(9)			4
Add: Certain tax adjustments(1)			—			30
Adjusted tax expense*			$	(133)		$	(129)
Effective tax rate			24.2%			29.9%
Adjusted effective tax rate*			23.7%			24.4%

(1)			Consists of certain income tax adjustments, including the accrual of a deferred tax liability on the prior period earnings of certain of the Company’s foreign subsidiaries for which the Company is no longer permanently reinvested and the impact of adjusting deferred tax assets and liabilities to stand-alone GE HealthCare tax rates.

Free Cash Flow*			For the three months ended March 31
			2024			2023						% change
Cash from (used for) operating activities			$	419		$	468					(11)%
Add: Additions to PP&E and internal-use software			(145)			(143)
Add: Dispositions of PP&E			—			—
Free cash flow*			$	274		$	325					(16)%

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*Non-GAAP Financial Measure

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2024, our Cash, cash equivalents, and restricted cash balance in the Condensed Consolidated Statements of Financial Position was $2,563 million. We have historically generated positive cash flows from operating activities. Additionally, we have access to revolving credit facilities of $3,500 million in aggregate, described in detail in Note 8, “Borrowings” to the condensed consolidated financial statements.

We believe that our existing balance of Cash, cash equivalents, and restricted cash, future cash generated from operating activities, access to capital markets, and existing credit facilities will be sufficient to meet the needs of our current and ongoing operations, pay taxes due, service our existing debt, and fund investments in our business for at least the next 12 months.

The following table summarizes our cash flows for the periods presented:

Cash Flow			For the three months ended March 31
			2024			2023
Cash from (used for) operating activities			$	419		$	468
Cash from (used for) investing activities			(188)			(266)
Cash from (used for) financing activities			(153)			673
Free cash flow*			274			325

Operating Activities

Cash generated from operating activities in the three months ended March 31, 2024 was $419 million and included Net income of $388 million, non-cash charges for depreciation and amortization of $148 million, and a $116 million outflow from changes in assets and liabilities, primarily driven by company-funded benefit payments for postretirement benefit plans, annual prepayments, and an increase in inventory, partially offset by a decrease in receivables.

Cash generated from operating activities in the three months ended March 31, 2023 was $468 million and included Net income of $383 million, non-cash charges for depreciation and amortization of $157 million, and a $72 million outflow from changes in assets and liabilities, primarily driven by an increase in inventory and company-funded benefit payments for postretirement benefit plans, partially offset by an increase in contract liabilities and an increase in accounts payable.

Investing Activities

Cash used for investing activities in the three months ended March 31, 2024 was $188 million and primarily included additions to PP&E of $145 million related mostly to manufacturing capacity expansion and new product introductions.

Cash used for investing activities in the three months ended March 31, 2023 was $266 million and primarily included additions to PP&E of $143 million related mostly to new product introductions and manufacturing capacity expansion and purchases of businesses, net of cash acquired, of $127 million related to Caption Health, Inc.

Financing Activities

Cash used for financing activities in the three months ended March 31, 2024 was $153 million and primarily included a repayment of $150 million of our outstanding Term Loan Facility.

Cash generated from financing activities in the three months ended March 31, 2023 was $673 million and primarily included $2,000 million of newly issued debt, partially offset by $1,317 million of transfers to GE.

Free cash flow*

Free cash flow* was $274 million for the three months ended March 31, 2024 and primarily included $419 million of cash generated from operating activities, partially offset by $145 million of cash used for additions to PP&E.

Free cash flow* was $325 million for the three months ended March 31, 2023 and primarily included $468 million of cash generated from operating activities, partially offset by $143 million of cash used for additions to PP&E.

Capital Expenditures

Cash used for capital expenditures was $145 million and $143 million for the three months ended March 31, 2024 and 2023, respectively. Capital expenditures were primarily for manufacturing capacity expansion and equipment and tooling for existing products and new product introductions.

Material Cash Requirements

In the normal course of business, we enter into contracts and commitments that obligate us to make payments in the future. Information regarding our obligations under lease, debt, and other commitments are provided in Note 7, “Leases,” Note 9, “Borrowings,” and Note 14, “Commitments, Guarantees, Product Warranties, and Other Loss Contingencies” to the consolidated and combined financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. We have material cash requirements related to our pension obligations as described in Note 9, “Postretirement Benefit Plans” to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Additionally, on April 1, 2024, we funded the acquisition of MIM Software Inc. with cash on hand. Further information regarding this acquisition is provided in Note 18, “Subsequent Events” to the condensed consolidated financial statements.

Debt and Credit Facilities

As part of our capital structure, we have incurred debt. The servicing of this debt is supported by cash flows from our operations. As of March 31, 2024, we had $9,255 million of total debt compared to $9,442 million as of December 31, 2023. The decrease in debt was mainly driven by a repayment of $150 million of the outstanding Term Loan Facility in the first quarter of 2024. As of March 31, 2024, there were $1,000 million of senior notes due in November 2024 recognized within Short-term borrowings in our Condensed Consolidated Statements of Financial Position.

The weighted average interest rate for the Notes and our Credit Facilities for the three months ended March 31, 2024 was 6.08%. We had no principal debt repayments on the Notes for the three months ended March 31, 2024.

In addition to the Term Loan Facility, our credit facilities include a five-year senior unsecured revolving facility that provides borrowings of up to $2,500 million expiring in January 2028, and a 364-day senior unsecured revolving facility that provides borrowings of up to $1,000 million expiring in December 2024. As of March 31, 2024, there were no outstanding borrowings on either of the two revolving facilities.

The Credit Facilities include various customary covenants that limit, among other things, the incurrence of liens securing debt, the entry into certain fundamental change transactions by GE HealthCare, and the maximum permitted leverage ratio. As of March 31, 2024, we were in compliance with the covenant requirements, including the maximum consolidated net leverage ratio.

For additional details on debt and credit facilities, see Note 8, “Borrowings” to the condensed consolidated financial statements.

Access to Capital and Credit Ratings

In connection with the Spin-Off, we accessed the capital markets and raised $10,250 million of debt by issuing $8,250 million of senior unsecured notes in November 2022, and completed a drawdown of the Term Loan Facility of $2,000 million in January 2023. In addition, we arranged $3,500 million of revolving credit facilities to further support our liquidity needs. We plan to continue to rely on capital markets, and we expect to have access to credit facilities to fund our operations. The cost and availability of debt financing will be influenced by our credit ratings and market conditions. Moody’s Investors Service (“Moody’s”), Standard and Poor’s Global Ratings (“S&P”), and Fitch Ratings (“Fitch”) currently issue ratings on our long-term debt. Our credit ratings as of April 23, 2024 are set forth in the table below.

			Moody’s			S&P			Fitch
Long-term rating			Baa2			BBB			BBB
Outlook			Stable			Stable			Stable

We are disclosing our credit ratings to enhance the understanding of our sources of liquidity and the effects of our ratings on our costs of funds and access to liquidity. Our ratings may be subject to a revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

For a discussion of recently issued accounting standards, see Note 1, “Organization and Basis of Presentation” to the condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

CRITICAL ACCOUNTING ESTIMATES

Management believes that there have been no significant changes during the three months ended March 31, 2024 to the items that we disclosed as our critical accounting estimates in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.