GE HealthCare Q3 2026: revenue up 7.2%, tax releases lifted GAAP EPS 39% vs 25% adjusted

GE HealthCare's third quarter was its best of the year. Revenue rose 7.2% to $5.51B (6.2% organic, meaning without acquisitions and currency moves), and all three segments grew. The patient-monitoring business, which lost money in Q2, earned $68M. Operating income rose 23% to $805M. GAAP diluted EPS rose 39.1% to $1.36, but part of that came from a much lower tax rate. The company's adjusted EPS, which strips out tax one-offs, rose 25.1% to $1.34. Management raised its full-year 2026 adjusted EPS guidance to $4.95–$5.05, from $4.80–$5.00.

Q3 2026 results

Adjusted EBIT is the company's measure of earnings before interest and tax. It excludes restructuring, deal costs, amortization of acquired intangibles, investment revaluations and refunds of 2025 tariffs.

Takeaway: The operating improvement is real. Adjusted EBIT rose 19.9% on 6.2% organic growth, every segment widened its margin, and patient monitoring is profitable again. The 39% GAAP EPS jump overstates it: pretax income rose 17%, and a tax rate that fell to 17.1% from 27.8% supplied the rest. The bigger question for 2027 is orders. They grew 4.0% after 11.1% in Q2, so revenue growth should slow from this quarter's pace.

Segments: what each business does and how it did

GE HealthCare now reports three segments. It merged its Imaging and Advanced Visualization units into Advanced Imaging Solutions in Q2.

• AIS sells scanners (CT, MRI, X-ray, ultrasound), image-guided procedure systems and imaging software. Organic growth came from CT, cardiovascular and interventional systems, and surgical products. Reported growth also includes $68M from Intelerad, the imaging-software company bought in March 2026 for $2.29B. Segment EBIT rose $81M "due to growth in sales volume, a decrease in tariff expenses, and an increase in price, partially offset by cost inflation."
• PDx sells the contrast agents and radioactive tracers that patients are injected with so scans show more detail. It is the highest-margin business, and organic growth of 13.8% came from "contrast media and radiopharmaceutical volume, and price." In October the company agreed to buy SOFIE Biosciences, a US supplier of PET tracers, for $945M in cash. The deal is expected to close in the first half of 2027.
• PCS sells patient monitors, anesthesia machines and maternal/infant care equipment. Revenue grew 8.5%, which the 10-Q attributes "primarily" to "improved product fulfillment in Monitoring and Maternal Infant Care." In other words, the company is shipping again after Q2's production and delivery problems. Segment EBIT rose to $68M from $27M. Over nine months PCS revenue is still down 4.0% and EBIT down $83M, so this is a recovery from a low base. The PCS chief, Jeannette Bankes, is leaving on November 15. Neal Sandy, head of PCS product strategy, takes over on November 16.

By region: US & Canada revenue rose 13.3% to $2,672M, with growth in every segment plus Intelerad. Europe, Middle East & Africa slipped 0.4%, "primarily driven by unfavorable foreign currency impacts." China rose 7.1% to $586M, but the 10-Q attributes that "primarily" to favorable currency plus AIS growth. Most of this quarter's growth came from North America.

What the headline numbers hide

• The tax rate made GAAP EPS look better. Tax fell to $129M from $179M while pretax income rose $109M. The 10-Q gives the reasons as "foreign income tax reserve releases" and the use of tax attributes, partly offset by a foreign tax audit settlement. At last year's 27.8% rate, net income would have been about $534M, or roughly $1.18 per share (+20%), not $1.36. The company's adjusted figures exclude these tax items. Its adjusted tax rate was 22.0% vs 21.8%, which is why adjusted EPS grew 25% rather than 39%.
• The adjusted figure is slightly below GAAP this quarter ($1.34 vs $1.36). The company adds back $61M of acquired-intangible amortization (up from $41M after the Intelerad deal), $17M of restructuring and $11M of deal costs. It then removes $50M of pension-related non-operating income, $9M of 2025 tariff refunds and $37M of tax benefits. Those adjustments roughly cancel out, so the gap between adjusted and GAAP is small and the exclusions look standard.
• Tariff refunds are small this time. In Q2, refunds of tariffs struck down by the Supreme Court supplied much of the EPS jump. In Q3 the pretax benefit was $13M: $9M for 2025 tariffs (excluded from adjusted EBIT) and $4M for 2026 tariffs (included). The margin gain mostly reflects lower tariff costs, price and volume, not refunds. Operating cash flow includes a $55M cash refund, which accounts for about 9 of its 53 percentage points of growth.
• Cash conversion was strong this quarter but weak year to date. Q3 operating cash flow of $907M beat net income of $623M. For nine months it was $1,365M against net income of $1,608M (0.85x). The main drag is inventory, up $394M since December (+18%) while nine-month revenue grew 6.8%. The 10-Q says the build is "to meet business demand." Contract and other deferred assets rose $292M. Receivables were flat, which is a good sign.
• Buybacks did little. The company bought back no stock in Q3 ($300M earlier in the year), and diluted shares fell just 0.9% to 453M. EPS growth came from operations and tax, not a smaller share count. Dividends paid were $16M. The quarterly dividend was raised to $0.04 from $0.035.
• Interest costs rose. Interest and other financial charges rose to $122M from $111M after borrowing for Intelerad. Total debt is $10.0B and cash is $2.9B, down from $4.5B in December.

On balance the quarter is flattered at the GAAP line: EPS rose 39% but pretax income rose 17%, and tax reserve releases made up the difference. The adjusted EPS growth of 25% is a fair measure of the operating improvement.

Did last quarter's read hold up?

After Q2 we flagged three things to watch: PCS revenue, the outcome of the PCS strategic review, and whether China would turn positive organically. PCS answered strongly, with revenue up 8.5% and EBIT up from a Q2 loss to $68M. Neither the release nor the 10-Q gives an update on the strategic review, and the segment is now changing leaders. China grew 7.1% as reported, but the company attributes it mainly to currency, so organic growth is still unproven. We also said the full-year margin and cash-flow targets carried more risk than revenue. Q3's 16.6% adjusted EBIT margin and $793M of free cash flow brought them within reach, and management raised both.

Guidance and outlook

The new EPS range implies Q4 adjusted EPS of $1.49–$1.59, against $1.44 in Q4 2025 (FY2025 $4.59 less nine months' $3.15). That means growth of about 3%–10%, well below Q3's 25%. Since nine-month organic growth is already 4.2%, a full year of ~4% implies Q4 organic growth around 3.5% by our arithmetic. Nine-month free cash flow is $973M, so Q4 needs more than $600M to reach $1.6B+. Q3 alone produced $793M, so that looks achievable.

Our view: guidance looks conservative for Q4, given the 6.2% organic growth and 180 bps of margin expansion this quarter. The weaker sign is orders. Organic orders grew 4.0% with a 1.03x book-to-bill, after 11.1% and 1.15x in Q2, so the order book that supported Q3 revenue grew less this quarter. Next quarter, watch three things: whether PCS keeps its margin above 5% under new leadership, whether order growth recovers above 5%, and whether inventory starts to fall. If inventory falls, cash conversion improves; if it keeps rising, demand may be softer than the build assumed.