While industrial behemoth General Electric (Fairfield, CT) is overall doing well, with earnings peer share one cent above the average of analysts' expectations according to a New York Times article, GE Healthcare posted worse-than-expected results for the first quarter of 2014.
Sales of health care equipment, including medical imaging machines, fell by 2 percent, to $4.2 billion in the quarter. TheTimes story notes that Jeffrey Immelt, GE chairman and CEO, attributes a large part of this decline to uncertainty about how health care reform in the United States will affect the structure of the industry and patient demand. So, Immelt said in the conference call discussing the Q1 results, hospitals and clinics are holding back on spending for equipment until the outlook becomes clearer.
As a result, orders were down 1 percent, which led to a 4 percent decline in profits for the healthcare business. Revenues in the United States were down 6 percent.
In the conference call as transcribed by Seeking Alpha, Jeffrey Bornstein, senior vice president and CFO, said, "Hospitals and clinics appear to be delaying purchases in response to the ACA. Patient inflows, outpatient visits, ER, surgeries procedures were all down 1 percent to 1.7 percent in the quarter."
Bornstein continued, "As a result of these dynamics, healthcare's first quarter was softer than we expected. The business expects the US softness to probably persist in the second quarter, but expects to continue to gain share and deliver earnings growth through the year."
Immelt elaborated, "...if you look outside the US, the markets are all normal, with Europe bouncing back and the growth markets still pretty strong. I think it's too soon to say [softness in the US is] just the impact of the Affordable Care Act.
"There's just so damn much going on in the US healthcare market right now. We're thinking about the next couple of years as being flat to up slightly. So, we are not really thinking much about robust growth and more about industry consolidation of hospital systems – more integration between insurers and hospitals."
