GE HealthCare just told investors a story they have heard from a lot of companies this earnings season. Costs went up faster than expected, and the second half of the year looks tougher than the first.
The market did not love the story. Shares of GE HealthCare (GEHC) dropped around 13% on Wednesday after the company missed on profit and cut its full-year outlook.
GE HealthCare lowered its full-year 2026 adjusted EPS guidance to a range of $4.80 to $5.00, down from a prior $4.95 to $5.15. The Wall Street consensus had been $5.07.
The CFO said the company is "prudently reducing our profit outlook for 2026" because of about $250 million in unexpected inflationary costs. That hit translates to roughly $0.15 off adjusted EPS guidance.
The drivers were specific: memory chip prices, oil costs, and freight rates. Those three lines run through the cost of building and shipping medical imaging equipment, which is a big slice of what GE HealthCare sells.
The Iran war is what is dragging up oil and freight, and the global memory crunch tied to AI demand is doing the same to chip prices. GE HealthCare is the latest company to flag that those cost pressures are not a one-quarter event. The CFO told investors the company assumes the higher costs will impact the rest of 2026.
The company also restructured several business units and made leadership changes, which adds another layer of uncertainty for investors trying to model future quarters.
GE HealthCare is the second medical-device name this month to take the input cost message seriously. The company supplies a meaningful share of MRI and CT systems used in hospitals, which means anything that pushes up its costs eventually pushes through to providers and patients. The next test is the Q2 print, where investors will check whether the lowered guidance proves conservative or just a starting point.
