Here's Why GE Healthcare Shares Slumped This Week
Inflationary pressures are starting to bite into profit margins for some companies, particularly those with long, complex sales cycles, such as GE Healthcare (NASDAQ: GEHC). That's why the company's stock declined 11.3% in a week after it released its first-quarter 2026 earnings.
The healthcare company sells relatively high-ticket imaging and visualization equipment, which tends to have long sales cycles, making it difficult for the company to immediately raise prices to offset cost inflation. While it also sells shorter cycle products like patient care equipment and pharmaceutical diagnostics, it's not enough to give it the agility to deal with rising costs.
Unfortunately, costs are rising, with GE Healthcare management outlining $250 million in increased costs, comprising $100 million from memory chips, $100 million from oil and freight costs, and $50 million from raw materials, including tungsten metal. These impacts are set to reduce earnings per share (EPS) by $0.43 in 2026. Management expects to take cost-mitigation actions that will improve EPS by $0.17 and implement price increases, resulting in a $0.06 improvement, alongside a $0.05 improvement from non-operational matters.
Source Fool.com
