General Electric (GE) has said it will spin off its healthcare division as part of a company-wide revamp. As a result, GE aims to focus on aviation, power and renewable energy, creating a simpler, stronger, leading hi-tech Industrial company.
In addition to the pending combination of its transportation business with Wabtec, GE plans to pursue an orderly separation from BHGE over the next two to three years, make its corporate structure leaner and substantially reduce debt. GE’s board of directors unanimously approved the plans announced today.
Kieran Murphy, GE Healthcare president and CEO, will continue to lead GE Healthcare as a standalone company, maintaining the GE brand.
John Flannery, GE chairman and CEO, said: “Today marks an important milestone in GE’s history. We are aggressively driving forward as an aviation, power and renewable energy company—three highly complementary businesses poised for future growth. We will continue to improve our operations and balance sheet as we make GE simpler and stronger.”
Flannery said GE Healthcare and BHGE are excellent examples of GE at its best anticipating customer needs, breaking barriers through innovation and delivering life-changing products and services.
Commenting on the news, Murphy said: “GE Healthcare’s vision is to drive more individualised, precise and effective patient outcomes. As an independent global healthcare business, we will have greater flexibility to pursue future growth opportunities, react quickly to changes in the industry and invest in innovation.
“We will build on strong customer demand for integrated precision health solutions and great technology with digital and analytics capabilities as we enter our next chapter.”
GE Healthcare recorded over US$19 billion in revenues in 2017 and posted 5% revenue growth and 9% segment profit growth in the same year.
The business provides medical imaging (including contrast agents), monitoring, biomanufacturing and cell therapy technology, leveraging deep digital, artificial intelligence and data analytics capabilities. Its products and services are valued by customers in 140 countries around the world.
GE expects to generate cash from the disposition of approximately 20% of its interest in the Healthcare business and to distribute the remaining 80% to GE shareholders through a tax-free distribution.
The structure, sequence and timing of these transactions will be determined and announced at a later date, but are expected to be completed over the next 12 to 18 months. GE Healthcare will conduct business as usual throughout this process, continuing to serve its partners and customers.