But in general, I just give a lot of credit to our China team that has done a really nice job being able to continue to execute in a market that has been a little bit unpredictable, but it’s a market that we believe is — continues to be a very important growth market into the future and all signs are that it’s going to continue to grow in the future. But again, to translate into Q4, I would say we start Q4 with a much healthier view of China than we started Q3, but we still think there’s going to be some level of effect equivalent to Q3 that will exist throughout this quarter as well.
Ryan Zimmerman: Very helpful, Pete. And then Jay, you called out the TSAs. I’m just curious kind of where you’re at from a percentage standpoint in terms of rolling off TSAs from GE what kind of impact do you expect from those in 2024?
Jay Saccaro: Sure. We’re pleased with the progress on TSA exits. So far we’ve exited approximately 130 of those about 20 were exited early. And a lot of this relates to IT supply chain facilities and then some other areas like HR and finance. So that whole program is on track. And as we think about 2024 and beyond, it’s really important for us to get to independence to get the stability and then that allows us to unlock some incremental cost savings opportunities. For example, we have to make sure that we get our IT system stable and then we can talk about all the wonderful opportunities for optimization that we have. And so it’s a real area of focus for us. And what I would say is so far so good as it relates to becoming an independent company supporting ourselves, pleased with the progress of the 130.
We have a lot that are underway right now. At the end of this year beginning of next year, we’ll make significantly more progress in terms of eliminating TSAs. And that starts to set the stage for incremental margin expansion as a stand-alone company.
Ryan Zimmerman: Thank you.
Operator: Thank you. Our next question comes from Jason Bednar with Piper Sandler. Your line is open.
Jason Bednar: Hey, good morning. Thanks for taking the question. Congrats on a good quarter here. Want to follow up on some of the prior questions on orders. Sorry to beat the horse here. But I think your comments on China will come as a relief today, but can you maybe provide some of that same directional commentary for orders in your other major geographies like the US or Europe for the third quarter? Was the US down a little bit based on some of those project cost comments you made? And does that mean Europe was up really just trying to put the puzzle together there. And then, is there anything you’d call out for us to keep in mind from a comp perspective for the US or Europe like you mentioned with the China Simples program?
Peter Arduini: Yeah. I’ll comment just on some of the markets and then maybe Jay you can comment on any of the comp comparison pieces that are there that I missed. But again, I think on the broader market particularly the US, we continue to see a solid backdrop. You heard me talk about the only kind of item that we did see was towards the end of the quarter some of the larger deals. We’re taking a little bit longer because of this point that some customers when they estimated what the total project would cost versus when they were ready to cut POs they had a little bit higher cost. And so they had to go back through their process to get approval, which again sometimes could add 30 could add 60 days to the process. And again, I don’t think this is a lasting item.
I think as the estimates tighten up with what the real costs are going to be that will play out. And it’s not wide scale. I think there’s some major cities in the United States where the cost of labor and public work so to speak have gone up higher. That’s really the piece there. I do think as we talk to most customers, Western Europe and the United States this pent-up amount of backlog of people waiting to get procedures whether they be cardiovascular, oncology, orthopedic procedures, the need for imaging, the need for other types of critical care support whether it be monitoring or anesthesia, we’re still seeing as much demand or pent-up capacity, pent-up demand that’s pushing on capacity as we did at the beginning of the year. Specifically for Europe, the team has been executing well on a tough macro environment.
Obviously Ukraine, Russia and then some of the conflict in the Middle East. But with regards to our customers, we’re seeing some of the similar dynamics as we see in the US with the approval process left taking longer, but there’s clearly some regional variances by country, but we continue to see the funnel of opportunities growing. And again I think the trends are positive from a patient backlog procedure standpoint as well. And so again in general as we get out and speak with customers around the world, it’s quite positive. The rest of the world, I would say Southeast Asia and Latin America actually continues to be very bright. We’re starting to see some countries in Southeast Asia that are deciding to invest pretty significant amounts to grow their capabilities.
And one of the first steps they typically invest in is having high diagnostic capabilities for their folks within their region. So that’s kind of the view at that point. I don’t know Jay if anything to add.
Jay Saccaro: No, I think that’s sufficient. Thanks.
Ryan Zimmerman: Great. Thanks. And then one follow-up just seeing a disclosure in the 10-Q regarding the amendment to your employee pension plan with benefits frozen effective December of next year. I know you mentioned in your prepared remarks Jay, can you provide some additional comments here just what’s changing with this amendment? What are the mechanics? What does it mean from a liability or cash flow perspective for GE Healthcare?
Jay Saccaro: Sure. I would maybe take a step back and talk about we have a very active approach to managing the balance sheet. For us this idea of having a healthy investment grade balance sheet is really core to what we’re trying to achieve. I think we’ve got a very good cash flowing business. And what that will allow us to do is, first, enhance the debt side of the balance sheet and then along the way continue with business development and then also evaluate other alternatives, things like dividend, which we have in place but also share buyback and so very active approach to managing the balance sheet. As it relates to the pension, we had a very large pension liability and for us we have an active approach there as well with respect to risk reduction.
We froze a remaining portion of the US plan, which is effective beginning in 2025 and it doesn’t really have a material impact on the size of the liability. The benefits are in 2025 and beyond there’ll be lower service costs and lower projected cash contributions everything else being equal. So what it really does is it minimizes the range of outcomes with respect to the pension, eliminate some risk with respect to the pension versus creating a real economic windfall for us. So the savings will be in service costs over time and something that starts to show up in 2025 and beyond.
