GE will spin off its healthcare division, GE Healthcare, in early 2023 as part of a larger effort to separate the nearly 130-year-old industrial giant into three separate public companies.
GE plans to retain a stake of 19.9% in GE Healthcare once it’s spun off. The conglomerate will also combine its renewable energy, power, and digital businesses and spin them off in early 2024, leaving the original company to focus on aviation.
The company expects the separation and transition to cost around $2 billion, with tax costs at less than $0.5 billion. GE intends the healthcare and energy spinoffs to be tax-free.
“Today and tomorrow, delivering on the future of healthcare is about enabling precision health: integrated, efficient and highly personalized care,” GE Chairman and CEO Larry Culp said on a call with investors. Culp will serve as non-executive chairman of the healthcare company once it’s spun off, while Peter Arduini will take on the president and CEO role of GE Healthcare starting in 2022.
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“Making this a reality requires merging clinical medicine and data science by applying advanced analytics and AI across every possible point of the patient journey. GE is one of the few companies with the reach, capabilities, and relationships to do this.”
WHY IT MATTERS
GE is pitching the separation as a way to allow the companies to focus on their specific business areas and make decisions in line with their respective industries. GE said the separate companies will also allow for dedicated boards with expertise in their areas, and for industry-specific career opportunities and incentives for employees.
“As a standalone company, Healthcare will be even better positioned to invest both organically and inorganically to drive faster growth,” Culp said.
THE LARGER TREND
GE has planned to break off its healthcare unit before; in June 2018, it announced it would separate the division over the next two to three years, but in 2019 Culp said it was re-evaluating those plans after the sale of its biopharma business.
In late September, GE Healthcare announced it had entered into an agreement to acquire surgical visualization company BK Medical for $1.45 billion in cash, which GE argued would support the expansion of its ultrasound business.
Earlier this year, it also announced the acquisition of Zionexa, a developer of in-vivo biomarkers to guide cancer treatment. In late 2020, GE Healthcare purchased Swedish medical X-ray imaging startup Prismatic Sensors.
In March, the healthcare division revealed the Vscan Air, a wireless, portable ultrasound device.
Source: Mobihealthnews
