I'm Larry Biegelsen, the Medical Device Analyst at Wells Fargo, and it's my pleasure to host this fireside chat with the management team from GE HealthCare. With us, we have Pete Arduini, President and CEO, and George Newcomb, the interim CFO. Also in attendance is Carolyn Borders, Head of Investor Relations. Pete and George, thanks so much for being here. Thanks for having us, Larry. Let's start with the strong Q2 results. Pete, 11% order growth, book to bill of 1.15. It looks like one of your competitors, Siemens, also saw a strong Q2 on those metrics. What drove the strength in Q2? I know you said three-quarters of it came from service contracts. How should we think about order growth in the second half of the year? Look, Larry, I think, Q2 was obviously a strong quarter, to your point, over 11% growth. I want to clarify something, though, is that that was all equipment and orders coming through. The backlog that grew to 2.1, the vast majority of that still doesn't come through orders. The way we recognize service is it will capture a large contract, it will go into the backlog, and then as it's consumed, portions of that will come through. Again, big backlog build and 11% orders growth within the quarter. It was quite good. Look, I think underlying that, the markets are strong. We're seeing still a lot of long waits to get scans. Some of that's driven by the need for many of our modalities now to be prepared for drug therapy or device therapy, and so that's been driving it. The other aspect is we are now bringing out more and more new products, and those new products are obviously driving some of the growth. It was obviously, definitely a good one, and we feel very good about what that means now for Q3 and Q4. That's helpful. That leads me to my next question. The organic growth guidance this year implies an acceleration in the second half of the year on a two -year stack basis. How much do the strong orders in Q2 contribute to that, and what are the other drivers? Yeah. Some of the Q2 orders will come through, but particularly in what was traditionally the previous ultrasound business, we will see those come through. But some of the long cycle items will come out more so of the backlog as we take a look in the second half of the year. Our ramp up is the traditional setup is we typically have a stronger back half just based on hospital budgets and stuff, and so the ratios look quite good. They are relatively favorable. To give you an idea, coming into third quarter, we actually had a higher percentage of the actual revenue committed, which basically means the site has their site readiness, we verified it, we have got the configuration, we have made the product. So we were pushing 80% coming in. So we feel quite good about what that looks like. Because of our backlog, because of the ramp, we have got good visibility into Q4. So feel quite good about that ability for the acceleration and what it means here for 2026 finish. And just last one on 2026. The margins are also expected to increase on a year-over-year basis in the second half. What are the drivers of the margin increase in the second half? George, you want to take it? Yeah, sure. So look, traditionally, historically, we've had about 250 basis points lift in margins second half versus first half. As you think about the drivers there, with the NPIs. So a lot of new products coming out. We've got traditional productivity that we do. We've got price. We've got PDX, which continues to be strong for us, and then we've got the PCS recovery. So maybe thinking about that a little bit further, with the NPIs, each of the products that are coming out now have a better margin than their predicate product. And as they start to mix into our revenue, then our margins will go up. On our productivity, we've got sourcing initiatives. We've got manufacturing initiatives. We have, overall, we announced earlier this year, the combination of our AVS and our imaging platforms. We should get productivity from that over time. Similarly, with our commercial, we merged some of our commercial groups together. We should get synergies there. As you think about price, we got a little bit of price in the second quarter. As we reprice the orders that we are taking now, we'll start to see that come through. PDX continues to be a strong part of our business. And obviously, it's our highest margin business. And then lastly, look, we had a rough first half with PCS. We had some supply chain issues. We had some supplier issues. As we start to push that out into the second half, we should see a recovery there, and that should also be. Yeah A margin lift. You kind of package all that together. That's why we see the second half margin. That's very helpful. Pete, I heard your earlier comments, and we saw the Q2 results, but there's a lot of concerns in the investment community about the health of hospitals because of some of these policy changes, and ones that are potentially coming, like 340B. What's your view and what's your visibility into some of these hospital capital equipment budgets into next year? Yeah. No, Larry, even here at your conference earlier, there's been some discussions on procedure volumes and such. What we do, just to let you know, we obviously spend a lot of time with hospital CFOs and CEOs, not just myself, but our teams on actually scanning and taking a look at how budgets will be planned out. In many cases, they have a capital budget structure that's three years out, and part of this discussion's interrogating to understand is it changing or not. We do a survey every quarter as well, where we compare notes and stuff. Then we really try to get as much procedural data, and those are the combinations of things we look at. At this point, we really don't see any kind of pullback in our specific arena. Some of that gets into what's been evolving, and really we've seen a lot of this since COVID, is just the need again for imaging, for even pharmaceuticals. You go back 10 years, there weren't many drugs that said you need to have a pre/post scan. If you look now at the use of a lot of these, because they're so expensive to determine efficacy, their scans are happening. The amyloid beta products, you know well, there's actually MRI needed to see if there's any type of adverse effects. There's PET scans needed. So that has created, on top of the baby boomer window, just a longer backlog to be able to access scans. We aren't seeing a lot of change in that. Now, you get into the current contemporary points you raised about the Medicaid changes. All of our U.S. customers knew it was coming. It was foreshadowed. They have been working plans. Obviously, certain jurisdictions and certain areas, the mix shift is a little more painful than others. We are not seeing that translate into, "I am not going to spend capital." In some cases, you actually see people saying there is more of an urgency that we need to be able to get the right equipment in that can bring in more higher-mix procedures into the portfolio. On your 340B point, 340B, obviously, however your views are, how it has been used by hospitals, it has been used that way. We do not foresee something taking place that goes back to ground zero. Even if it were capped off in expansion, it would still have an adequate role, obviously, in helping hospitals fund their needs. We project at this point in time, a reasonably stable environment. The number one driver of that, though, is the amount of procedure growth that is underpinning it. That is helpful. Good to hear. China, a big part of your business. It grew low single digits in the second quarter, but you still expect China to decline slightly in 2026. Pete, what are you seeing on the ground today in China, including VBP? Yeah, look, China has been a very, obviously dynamics an understatement, market over the last couple of years. If you think of the prior two market and all of us down double digits, it is good to see that we are starting to see some stabilization. To your point, Larry, we are still predicting to say we are going to be slightly down. It is definitely being more stable and more predictable, which is step one. I think the growth of VBP, it is a little bit of a double-edged sword, meaning it creates more price pressure. It also provides transparency and visibility. Even for a company of our size and scale that has been in China, making things for over 35 years and being there for over 100 years, our visibility of what was transpiring was still some of the lowest of any country we participate in, because there would be deals we just didn't see. When it becomes in VBP, you see it all. You may not want to participate in all, but your visibility goes up, and there are deals we have won at acceptable margin rates that we probably wouldn't have seen without it. I think the second thing is, what it does is actually elevates it to a level where the ability for certain players to maybe manipulate an outcome are pretty much eliminated. I think that's one of the reasons the government likes the approach. We have actually done a little bit better in VBP. We also are adjusting our go to market. You don't need to have the same extensive clinical structure or distribution structure, and so we will have different margin approaches at what we will pay to support that. I think those are all the things that say, "This is what means it's starting to stabilize." That being said, you have to be local. We moved vast majority of our in China, for China manufacturing there in the last four years. We still have last mile of another 10%, but that's critical because if you want to compete in China, everything you sell there, many cases, if it's going to be associated with price, has to be sourced locally. Otherwise, one of the local players is going to have an advantage over you. That's one of the strategies that we have been going after. I just say last piece, Larry, as we look into the horizon, it's hard to always predict how China's playing out. But I think we are going to see continued stability. I think we have talked about this in the past. I don't think we see a big spike back up. But if we could move from negative territory to slightly positive and continue to improve that's the kind of expectations we would have that would help us achieve our longer-term goals. That's helpful. It sounds like the national tender process that came out a few months ago is something you're. Sorry to put words in your mouth, but is that a net positive for you because of this visibility? Or not? How would you frame it? I'd say it's net equal. When this came out, there's a lot of people saying, "Oh, VBP's only going to be 15%-20% of the market." We had modeled that ultimately over time, it's going to be over half of the market. And we had looked at what are the pros and cons in a very stark way to say that. Which then gets you into a mode of saying, if this is where it's going to be, how will that play out? There's no doubt in the last quarter or so, we had some benefits, and we did a little bit better in VBP. If you follow it, which I know you have in some of the other disposable areas. Sometimes the price starts in the first rounds out more challenging, and then it starts moderating back because customers want quality, customers want service. In a disposable world, you can say company A wins, company B's out, all of B's out, and it's just A. In our world, you have an installed base, so there might be one new product. If you have eight of these other products and you put a different one in, it works differently, it's serviced differently, it causes more challenges. I would say we have a few more opportunities to have the right type of discussion why you'd want to buy us other than just price. And if we get in early enough, we have those right discussions, I think we can win. That's what we've been seeing. But again, it's still a challenging market, but it's a stabilizing market, and that really is what we want in our forward plans. Okay, good to hear. Switching gears to PCS, I guess two-part question. One is based on what George said earlier, it sounds like you expect some improvement in the second half. Just want to make sure I'm hearing that correctly. And second, what needs to happen before you conclude this strategic review? Yeah. Well, I think to George's point, again, the first half, we had some fixable events that took place. Some of it was related to supply chain, some of it was related to manufacturing, and most of it was associated with some older products that we just have had either end-of-life components, things of that nature that we've converted out. That challenged some of the supply chain. Most of that has been behind us, and we've been really focused on this quarter. I think Jeanette and her team have done a nice job of really focusing on moving from what would normally be monthly, weekly execution into weekly, daily. And that rhythm to make sure that the teams are on track. Because as George said, when you look at the profitability of that business, there's a reasonable amount of fixed cost. Filling the plants makes a huge difference for the conversion of profit. We are on track. I feel good about the direction that we are going. The first step to any type of strategic look is, well, let's get the business back to what it should be able to do. I think as we exit this year, I think we are going to be able to see that with improvement in Q3 and continued on in Q4. That is step one. Then look broadly on the analysis. It is a really good portfolio of products. The question for us, it is a capital allocation. If you think about monitoring, one of the top two monitoring businesses, top anesthesia business, diagnostic cardiology, one of the top two diagnostic cardiology businesses, a top three infant care business, and a top three disposable cuffs business. It is a diverse one. The question is, do all those things need to be together? That is one of the discussions. Are there pieces that would make sense someplace else versus keeping those together? Then there is a fundamental question of the whole business. Do we keep it with the improvements we are making, or is it better someplace else? Part of that discussion, Larry, will be less about is this a good or bad business? It is a good business. Could we put more capital to work in PDX or the new AIS and be able to drive that? I think by as we get through the end of this year, starting in next year, we will have a really clear view of that. Make no mistake, job one is get it back on track, and I think we are off to the right start. It sounds like we could get an update on the strategic review conclusions. Maybe I am thinking like the Q4 call by then. Would you agree? I think we will be in a window to tell more, talk more about it at that point in time in February, yeah. Okay. That's helpful. PDX, really strong Q2, almost 15% growth. Yeah. Great work there. What drove the strength? How are you thinking about the rest of the year? It does seem like a supply issue, one of your competitors contributed to some degree. Yeah. Do you want to start off on PDX, and then I'll- Yeah. I think, look, obviously, we did see strong growth on our core contrast media product where as we see it out in the market. The supply is just about keeping up with demand, so that from our perspective, that continues to be strong for us. Our radiopharmaceuticals continues to do well and is ramping as we would like. I think as we look out into the rest of the year, again, with the procedures that Pete talked about, we don't see a subsiding of demand on that. I think from that perspective, that's how we think about PDX. Yeah, and it's a really cool business, and it's kind of entering into a renaissance window. It's interesting. Contrast business has been around for 35 years. It's been generic for the last 18-20, yet it's still growing. A lot of that's underlying, Larry, when you talk to all the device guys that need CT imaging to support it or anything that's happening in the vascular lab, neurovascular, peripheral vascular, cardiovascular, there's contrast agents used. You know in the outpatient world, there's growth there. That's driving it. To George's point, between us and the other key suppliers, supply and demand is just matching up. To this point about other entrants coming in, there's been, over the years, eight, 10 different entrants that come in or come out. It's not the easiest generic market, meaning it's not you put a replacement vial on the shelf, and it gets a script. You got to be in the hospitals. You got to be working with injector companies and those things. I think we view there's probably some room for expansion just based on this market is projected to double over the next 10 years. We're already seeing that linearity and that ramp matching that. I think, our business, we feel good about where it is and what we are able to do to protect that and grow it based on our differentiators, which are supply continuity, the amount of features, the alignment with injectors. On the radiopharma side, it's continuing to ramp, but not just in Flyrcado, which is the myocardial perfusion product, you know, Larry, but also Cerianna for breast cancer. We're starting to see Vizamyl ramp up quite a bit. These are all double-digit growth products, and I think we're going to continue to see that as you see the efficacy of the diagnostics, and then also how that works with therapy. Big part of our play is to continue to build out that business to be more robust across the value chain. I think of this Nihon Medi-Physics acquisition we did in Japan as both CMO-type distribution, but it's also new molecules. The CMO area is also quite a profitable area. The ability to develop your own molecules and leverage them in different geographies, all those things give you differentiation that's hard to duplicate. And then obviously, if you align that with what we do in PET, what we do in SPECT, and have the equipment, we are one of the few companies that actually can kind of bring these solutions together for customers in a really exciting area, but can be a complex area if you do not have someone like GE HealthCare to kind of simplify it for you. So, I am quite bullish on where we are headed there, and I think what you saw is emblematic of both of those businesses continuing to do well. That is helpful. A couple of follow-ups. The one short term, is Bracco still having supply issues in Q3? Are you going to see a benefit? I do not want to comment specific about any other player, but let us just say in our space, there are still some supply disruptions that are happening, yeah. Okay. Then, on the generic Omnipaque, you know what your competitor is saying publicly in terms of their kind of aspirations. I guess one question is, initially, they are going to go after the spot market. How big is the spot market relative to the contracted market, which is probably a little more protected? Well, it plays back to your previous question about what are some of the other shorts out there. But, spot market could be 20% of the business, depending on where people are at different points of time with availability and such. But again, the demand around the world is growing. I think because of our global footprint, we also have the opportunities to move from one country to another based on demand, also based on how we take a look at profitability or where we want to supply it. So, I think from that standpoint, we're actually in pretty good shape, what we contract, how we think about it. And again, just to remind everyone, sometimes when we get in these discussions, people think this is a $1,000 a dose drug. We're talking about maybe $15 to do a full-body CT study, and the cost of goods on these products, when you start getting down into the single digits based on iodine and stuff, make these challenging to make profit. And so we're not talking about huge numbers. The other aspect is when you do an ANDA and you come out, you pick one product to follow, their NDA. But these products are fundamentally interchangeable. And so I think as spot market opportunities come up, there's still room for a player out there to do reasonably well and all of us still to continue to grow, Larry. And I think your LRP calls for PDX growing high single digits? Correct. No change to that? Not at this point in time. Obviously, we are doing better than that. We will update when we update, but obviously, it is good to see that it is outperforming what we said it would do. Okay. But it sounds like you think you can do at least high single digits. It is not- I think we have good opportunity to over-perform, and obviously, we are doing that right now. Right. It is step by step here. Let us see how we do in the next couple of quarters, but I am optimistic about what we have got going in PDX. Flyrcado, you have been giving very helpful kind of dosing numbers up each quarter. We can do the math. Based on what you told us on the Q2 call, it does seem like a pretty steep ramp to get to the $500 million goal in 2028. I guess the simple question is how do you get there? Yeah, and I think, Larry, you appreciate this. You follow more of the med tech. I think on the pharma side of things, the big part is getting adoption into some of these centers, even if they are low rate of users to start. Then the ramp can go up multiple hundred doses very quickly. So, what we have spent time on is obviously the dose number is helpful for you guys to model. Last quarter, I also mentioned that we had close to, I think, 30 new folks that came on. That is the number ultimately that I keep a close eye on, because they start, we originally were like 90 days to get them up to having a moderate dose use. Now it is about 60 days as we have got the rhythm going. But you bring on 30, then you bring on another 30, 60, 90. Those guys go from one to two doses a day to start going to eight, 10, 12. Ultimately, that is how you get a solid base of users that have that patient flow. So I would expect to see, by the time we exit the back end of this year, that we are on track to the right cohort of users to get us over half of the way there here in 2027. That is kind of how we look at the volume. But I feel quite good about the ramp. Again, one of the things that sometimes gets lost in all this is what is the customer feedback? Hands down, best product out there for myocardial perfusion, the easy use of it, the quality of what it does relative to false negative, false positive kind of elimination versus predicates. All of those things are holding up, which is the most important aspect to determine how well it will do long term. Just one follow-up on that, Pete. Maybe to make sure I understand you correctly, you said about more than halfway there or something to that effect in 2027. Are you saying basically $250 million in 2027? Because $500 million is. I am not saying actual doses, Larry. I am talking about the users set up, which we do not give that full number, that we will be able to ramp to. That is the important part. Whether we have the actual dose translate to the dollars is less important to me than the amount of users that can easily ramp up to that. You were not saying $250 million next year. I did not say $250 million year, but we will give some more clarity, obviously, when we give updates for 2027. All right. But just to reiterate, you still feel good about the $500 million. Yeah. Look, I think the $500 million in 2028, I think long term billion dollar molecule, all that 100% in line. What the actual number is for 2027, we'll give when we get to the beginning of 2027, how we're thinking about it. Helpful. Turning to the innovation cycle. You have a lot going on. Yeah. In a good way, right? Right. I see press releases coming out almost on a daily basis on new product flow. But you said on the Q2 call, these new products are still under 20% of the value of ordered growth. Photonova Spectra was also a minimal order contributor. And I think you just got CE mark. Is that right? Correct. How are you thinking about the contribution from new products, including Photonova Spectra, going forward? Yeah, just to be clear, we have new products that are in our growth number driving it, but these, what we call kind of lighthouse products, the one like Photonova Spectra, total body PET, the vascular room, those are the ones that are still small contributors to the overall number. So again, if you think of the number one reason we feel good about being a mid-single digit grower out into the future, it's because we're getting our chin to the bar there now where we have struggled in the past, and we're just starting to get to this phase of this new wave of innovation. So, I think Photonova Spectra, we feel quite good about getting CE mark. We have the 510(k). Orders will start coming in at a higher pace here in the second half. We'll be ready to start more of our shipments in the beginning of 2027. So that's in line with what we had planned. MR's actually doing quite well. I think the SIGNA Bolt, our 3T platform, our whole new UI interface, which is AI driven, is getting a ton of great reviews. It's helped really drive our growth, at a level of where we're picking up share for the first time in quite some time, which is great to see in that business. As well as platforming it, and we'll talk more about this in the future, but the platforming it's also bringing the profitability up within that business, which is super important. And then our total body PET, I think we've got the most interesting platform out in the marketplace. What that can do, not only now with its sensitivity, but longer term about more procedures that move further upstream into the process. As well as we just announced, too, I think it was our CE mark on our 12-head SPECT camera and some of the early work that's coming out there for some of these new molecules like actinium, as well as the amyloid beta molecules. It's the only product in the world that can actually, same product could image and SPECT for theranostics. So some really good stuff that's got us back as well in the top eyes of a lot of the luminaries around the world discussing about the GE products. Then ultrasound and vascular are hypercritical. I think if you look at the growth that's happening in outpatients, everybody's talking about vascular labs or C-arms or ultrasound products there. I would argue right now, we probably have the best lineup of anybody out there. In vascular, for sure, this is the best lineup GE HealthCare has ever had, period. What that means is now, you're competing in a really growing space in an area that typically has higher margins and higher growth rates than some of the other modalities we're in. So we're set up well. Okay. That's helpful. Any early feedback from customers on Photonova Spectra? Your technology's a little bit different from your competitors. Any early feedback? Yeah. Obviously, we've had a lot of the clinical guys that have done stuff, whether it be the University of Wisconsin and such. I think, the short of it is the dose characteristics are amazing. I think image quality, people have been really blown away with the spatial resolution and even the algorithm work of what that means in challenging areas where there's metal and things that you traditionally have artifacts. hen the part that folks are super, I think, enamored with is the spectral imaging capability. This multi-bin separation that allows you to understand tissue characteristics. That doesn't happen on the first generation products that our competition has. I think the last part is we've tried to kind of make it easy, meaning the certain features on the first generation products, you have to determine, am I in high res? Do I have to have wide field of view? I have to select these modes. Ours runs constantly in the same mode. Why that's important is as you get into these studies and you say, "Oh, I really wish I had this data on this cardiac patient." The only way you're going to get it on a first generation system is you got to go back and scan them. On ours, all the data's there. We got to get it out there. We got to get more reps and all those things. But those are the things that customers tell us they like about our design. Great. Pete, I wanted to turn to the medium term. You recently, I think on the Q2 call, reiterated your commitment to the medium term targets for sales and margins. I know you haven't provided guidance for 2027 yet, but what do you see for 2027 to get you to the target ranges? I guess you have a CFO transition, so just. Yeah To confirm that it's still intact. We've got George here, who's been obviously our controller and has done a fabulous job stepping in as the interim. We're super excited to have Bill Grogan join. Bill's going to join actually next week, so we'll have him in the saddle. Has a great background. Has been 10 years as a CFO, primarily in industrials, but also in mixed industry. He was at IDEXX, where there's some life sciences businesses. I think his fit that's super great for GE HealthCare is we do have a diversity of complex technological development. He's got experience there. Someone who's grown up in business systems. I think what's really important for us and some of the better execution you're seeing is our implementation of our business system called Heartbeat. I think Bill's going to be someone that can really step in and understand how to even make Heartbeat better and embrace it. He's just had a really good track record, I think, of thinking about how to actually optimize businesses for higher performance. So we're really excited. That's all on track, and we're excited about getting him on board. Look, when I look at where we are with midterm, I feel quite good. If you think about the macro world for everybody, it's been a challenging last three to four years, whether it be some of the China challenges, then having the tariffs. As many in the tech world have said, with the cost of memory, these are some of the biggest changes they've seen in their whole career in 30-some years. At some point here, some of these things have to subside behind us. Even having those laid on top, which could be worth almost a couple of hundred basis points of headwind. When we said we would be 17-20, we're still on track to that even with those headwinds. Well, why is that? We are getting price. We are getting VCP and cost reductions at a better rate. Our new products are all coming out at higher gross margins than their predicate, and they're actually performing better. Then we're benefiting from some of this mix and some of the businesses we talked about that are higher. So I feel quite good about it. Obviously, we're demonstrating the mid-single digit growth. Orders of 11% one quarter is great. That's not something we would say you're going to perform all the time on. But in a trailing 12 months, we're now at a 5% range, which, in the previous years, we haven't been. So those are the key things. Then again, we're going to be focused heavily on margin. We think we still have lots of room to go, and it's that composite of all these things together. A better solution, a better cost structure, and then ultimately better optimization of how we bring all these things together. The mid-single digit organic growth. You're not there this year, but that is the LRP target. Correct. You still feel good about that? Yeah. I think you're going to see us continually make some progress against that. If you're not there next year, it's kind of hard to get there in the LRP, right? Correct. Okay. Fair enough. Pete Arduini, really appreciate you being here. Got a minute left. I didn't ask you about capital allocation and M&A. Anything you want to add on that? Well, I would just say, first, thanks for having us here. Capital allocation, none of our priorities have changed. Obviously, our highest return, IRR work is internal investments. Hopefully, you are seeing that with all the new products coming out. I think we are at the right level as a percentage of sales in R&D right now. We have done selective buybacks. We have done some things here with our dividend. But we believe that there is some good opportunities with the right types of tuck-in M&As, things that can actually build out the girth of the company, either defensive capabilities, but in many ways, moving us into new areas where you see more recurring revenue or higher mix. I think Intelerad is a great example. Digital space we can integrate more together around. Growing at high single digits, potential to grow faster, and margins in the 30s. Those are the kinds of things you are going to see more of. But look, I think we are at a point right now as an inflection point for the company, where those midterm goals are really becoming real, and we feel quite good about where we are positioned. Perfect. Great. Thank you. Thank you.