Jay Saccaro: Sure. Maybe first on the China comp and the contours of the year. As you recall, last year, we saw roughly 20% organic growth in the first half of the year. So when we gave guidance originally, we said first half, negative; second half, positive. And one of the things that we’re watching very carefully is the time line around this new stimulus package. As I said earlier, I think this is long term, very positive for the market. But how much of this impact we see in 2024 really relates to sharing more guidance from the government and then also customers acting on it? So we’re very bullish. But what that means is certainly, there’s going to be some positive impact relative to our previous expectations in the fourth quarter related to stimulus.
But what happens in the third quarter and how much of that demand is pent-up paid off in the third quarter versus delayed to the fourth quarter? How much of the fourth quarter stimulus impacts Q1 and Q2 of 2025 to Pete’s comments earlier? That’s really a question that we’re watching very carefully. And so we’re optimistic about this. But I think it’s — as we think about the third and fourth quarter, third quarter will be much very flattish in that sort of a range with fourth quarter seeing some of that pent-up demand paid off. But again, a lot of this depends on when all of this comes together from a customer demand standpoint. As it relates to the order one, maybe, Pete, do you want to address that?
Peter Arduini: Yes. I think, Graham, I mean, it’s a little bit more of the same. I mean, the first part is, again, the markets that we participate in around the world over the last 18 months coming out of COVID, have either been roughly flat or slightly down. We see that trend over the next 2 years. Again, a lot of it tied to this lagging indication that the more actually procedures are growing, more patients are coming into the systems. You need more things that we make. So that’s a really important one. And again, I think across all of our markets this year, we’ll actually see an uptick over the ’23 window. The new NPIs is a big deal. And so again, that adds some pricing growth. It also adds to some share gains with it; and then services.
So we have been gaining some share in the last couple of years. Our prior 78%, we haven’t probably gained as much. When you do that, you start growing your service base and service becomes a bigger contributor within your overall capabilities. And then the last part is these care pathway here is that we’ve been nurturing start to bring more growth in the next year or so. Again, from how Alzheimer’s we talked about, the cardiovascular care pathways and how products work together but even a product like Flurpiridaz, those are some of the things that we take a look at, that will continue to kind of drive a focus on mid-single-digit growth in orders that will then translate that into revenue. And then based on timing, you may be slightly higher or lower in a given quarter but that’s the formula that we’re executing on.
Graham Doyle: Great. A cheeky quick follow-up on China. Just because the sort of stimulus package or idea that you sort of mentioned, I know Philips and Siemens have referenced something similar. Presumably that relates to this medical equipment renewal because it doesn’t, on the surface look, particularly ambitious in terms of the 6% CAGR on spend. But is this something you’ve seen in the past where these things can expand and become bigger? Is that what gives you some cautious optimism around that?
Jay Saccaro: Well, there’s a couple of different views out there. There’s a larger stimulus number that’s in the trillions of yen that’s touching multi-industry and that is money that actually is kind of stipend dollars, if you will, that will go to particular areas within health care and other industries. So what that direct distribution looks like it’s a big number. That’s more of what we’re actually referencing. And so again, if you compare it to the previous stimulus which was interest-free loans, this is portrayed laid out to actually be dollars that will be granted to actually buy equipment. And again, so we believe that will have a larger appeal because by definition, many customers weren’t even going for a loan. So this opens up the field for that and it also is being expressed at this point to be not a 90-day or 120-day window but to be a multiyear approach.
So again, more to come and see what the details are on it but from when we gave guidance to start the year, this is net-net positive, really any way you look at it from a China outlook. And we’ll see what it means for this year. But clearly, if implemented the way it’s described, it will have a bigger impact as well going into next year.
Operator: Our next question coming from the line of Matt Taylor with Jefferies.
Matt Taylor: I was hoping you could comment on 2 things. One is that you identified the catalyst in Ultrasound and the resolution for some of the fulfillment issues to resolve catalyst for growth inflection through the year in those segments. Could you help us understand how much inflection that could drive as you work through the launches and resolve the challenges?
Peter Arduini: So Matt, let me just take. I’ll take a hit at the ultrasound piece. I think you’re referring to the PCS shipments on that. You can touch on that. Look, I think with Ultrasound, again, I think the first part is, is that when we look at our market dynamics, they are definitely continuing to improve. And as I say, one of the top 2 largest players worldwide, that has a positive impact. From a standpoint of the compares, I mean, if you take a look at our expectation is that we will continue to ramp our revenue growth throughout the year from Q2 on. And then also from an order standpoint, it’s a highly correlated business. I mean just to give you an idea, a vast majority of this business is sell and install. China, this tends to be a larger portion of our business.
And so some of the effect that we felt here in the first quarter was directly correlated to the challenges in China. And I think even China STEM will help ultrasound. But ex-China around the world, U.S., Europe, we’re bullish on how we’ll see the pickup within China — excuse me, in ultrasound and particularly because of the new product introductions that we’ve laid out. Jay, what about that?
Jay Saccaro: Yes. And just at the highest level, Matt, I do think we have easing comps throughout the year and I think that’s supportive of the accelerated growth profile at a GE HealthCare level. With respect to PCS, we’ll see accelerating growth as we move forward here, with the second half of the year, more similar to growth rates that we saw last year. And as we resolve some of the bottlenecks in the second quarter, we’ll see some level of improved growth. But then again, more of those benefits will accrue to the second half of the year.
Matt Taylor: Great. And can I ask a follow-up on phasing? You talked about some sequential improvement in organic growth and margin in the second quarter. And that would be modest improvement. If I think about what modest means, maybe going to slightly positive organic and, I don’t know, 20 to 40 basis points on margin. If I flow that through, consensus EPS looks like it needs to come down a little bit. Is that kind of thinking your math wrong? Or can you help us at all with the second quarter?
Jay Saccaro: From a second quarter standpoint, we’re looking at low single digits on the sales and continued — we’ll see a reasonable expansion versus the prior year. So — and that will actually, the first quarter is the lowest quarter of the year. So we’ll see a little bit more sequential margin expansion more similar to year-over-year improvements versus last year, similar to what we saw in the first quarter. So I don’t have the — we don’t talk about consensus. We don’t get into that. But I think those are the dimensions that are in play in the second quarter.
Operator: And that concludes the question-and-answer session. Speakers, please proceed with any closing remarks.
Peter Arduini: Thank you, operator. Thanks, everyone, for joining us today. Hopefully, we addressed your questions. We’ve got all the right pieces in place here to deliver on our annual guidance that we’ve laid out and we look forward to connecting with each of you and some upcoming calls or conferences in the next few months. Thank you very much.
Operator: Ladies and gentlemen, that concludes our conference for today. Thank you for your participation. You may now disconnect.
