GE Healthcare will be spun-off as a separate company in 2023
Spinoff will make GE Healthcare more adaptable to the market: analysis
November 19, 2021
by John R. Fischer, Senior Reporter
Following its spin off from General Electric, GE Healthcare is poised to be more nimble and able to adapt to changes in the markets it serves.
The company especially sees great potential in its fast-growing, diagnostic imaging equipment market with the growing influence of AI and more competition from startups and established players. Among the different demands it expects to be able to better address are the needs of aging populations, access to healthcare services in emerging economies, new technologies and the COVID-19 pandemic, according to The Wall Street Journal.
“GE Healthcare will be more nimble because they are no longer hostage to the complexity of decision-making that comes with a company like GE,” Michael Abrams, managing partner of health consulting firm Numerof & Associates, told The Journal.
GE announced earlier this month its intention to spin off its healthcare division as a separate business. The decision was motivated by a desire to reduce debt, simplify the company’s business and improve its share price. GE Healthcare will be spun off in early 2023, with GE retaining a 19.9% stake in the new firm. GE’s renewable energy and power division will also be spun off in early 2024, with the main company singularly focusing on its aviation business.
Its confidence in its diagnostic imaging unit stems from higher demands for MR and X-ray systems to diagnose a growing number of age-related diseases and conditions brought on by sedentary lifestyles. Telemedicine has also bolstered the need for handheld imaging devices like ultrasound to monitor patients outside hospitals and the transmission of larger data sets over the internet.
As a stand-alone company, GE Healthcare will be able to move faster and have more capital to acquire companies and technologies. It accounted for about 23% of the whole company’s $79.6 billion in revenue last year, making it the most profitable division then, reports Modern Healthcare.
Currently, GE is the world leader in the global market for medical imaging, which was worth around $22 billion in sales in 2020, according to Signify Research. It holds around a 26% share here, compared to Siemens’ 21% and Philips’ 17% stakes. And with more than four million installed units worldwide, it was able to rack up $18 billion in revenue last year.
AI is also seen as a key driver by the company, being used to interpret X-rays to save radiologists on time and produce more accurate diagnoses, and helping make MR more accurate and easier to understand by eliminating noise that shows up in images.
"This was a hot division inside of GE. Maybe they can make decisions faster without the corporate structure," Jeff Goldsmith, president and founder of consulting firm Health Futures, told Modern Healthcare. "There is a lot of money pouring into AI.
Following the spin off, GE Healthcare plans to enter into more consulting and data analysis partnerships with providers, and is already expanding its network of command centers to acquire data in real time so it can streamline patient flow, reduce wait times, balance workload and increase clinical standardization. Its incoming CEO, Peter Arduini, may also do away with some products and businesses that are not central to the company and pursue acquisitions in more promising markets, according to The Wall Street Journal.
Other leading OEMs are taking similar approaches to GE. Siemens also spun off its healthcare business in 2018, while Philips sold its lighting, television and entertainment divisions over the last few years to focus on healthcare. Additionally, consolidation has given the six largest suppliers of MR equipment a 90% stake in the global market, according to Signify Research.
But despite its greater flexibility, GE Healthcare will face stiff competition from big players like Siemens and Philips. It also will be up against Chinese vendors who are expanding their global presence in markets for more affordable, lower-functionality systems. This includes Shanghai United Imaging Healthcare and Shenzhen Mindray Bio-Medical Electronics. “Looking internationally, it’s going to be more of a challenge for GE,” said Abrams.
The company especially sees great potential in its fast-growing, diagnostic imaging equipment market with the growing influence of AI and more competition from startups and established players. Among the different demands it expects to be able to better address are the needs of aging populations, access to healthcare services in emerging economies, new technologies and the COVID-19 pandemic, according to The Wall Street Journal.
“GE Healthcare will be more nimble because they are no longer hostage to the complexity of decision-making that comes with a company like GE,” Michael Abrams, managing partner of health consulting firm Numerof & Associates, told The Journal.
GE announced earlier this month its intention to spin off its healthcare division as a separate business. The decision was motivated by a desire to reduce debt, simplify the company’s business and improve its share price. GE Healthcare will be spun off in early 2023, with GE retaining a 19.9% stake in the new firm. GE’s renewable energy and power division will also be spun off in early 2024, with the main company singularly focusing on its aviation business.
Its confidence in its diagnostic imaging unit stems from higher demands for MR and X-ray systems to diagnose a growing number of age-related diseases and conditions brought on by sedentary lifestyles. Telemedicine has also bolstered the need for handheld imaging devices like ultrasound to monitor patients outside hospitals and the transmission of larger data sets over the internet.
As a stand-alone company, GE Healthcare will be able to move faster and have more capital to acquire companies and technologies. It accounted for about 23% of the whole company’s $79.6 billion in revenue last year, making it the most profitable division then, reports Modern Healthcare.
Currently, GE is the world leader in the global market for medical imaging, which was worth around $22 billion in sales in 2020, according to Signify Research. It holds around a 26% share here, compared to Siemens’ 21% and Philips’ 17% stakes. And with more than four million installed units worldwide, it was able to rack up $18 billion in revenue last year.
AI is also seen as a key driver by the company, being used to interpret X-rays to save radiologists on time and produce more accurate diagnoses, and helping make MR more accurate and easier to understand by eliminating noise that shows up in images.
"This was a hot division inside of GE. Maybe they can make decisions faster without the corporate structure," Jeff Goldsmith, president and founder of consulting firm Health Futures, told Modern Healthcare. "There is a lot of money pouring into AI.
Following the spin off, GE Healthcare plans to enter into more consulting and data analysis partnerships with providers, and is already expanding its network of command centers to acquire data in real time so it can streamline patient flow, reduce wait times, balance workload and increase clinical standardization. Its incoming CEO, Peter Arduini, may also do away with some products and businesses that are not central to the company and pursue acquisitions in more promising markets, according to The Wall Street Journal.
Other leading OEMs are taking similar approaches to GE. Siemens also spun off its healthcare business in 2018, while Philips sold its lighting, television and entertainment divisions over the last few years to focus on healthcare. Additionally, consolidation has given the six largest suppliers of MR equipment a 90% stake in the global market, according to Signify Research.
But despite its greater flexibility, GE Healthcare will face stiff competition from big players like Siemens and Philips. It also will be up against Chinese vendors who are expanding their global presence in markets for more affordable, lower-functionality systems. This includes Shanghai United Imaging Healthcare and Shenzhen Mindray Bio-Medical Electronics. “Looking internationally, it’s going to be more of a challenge for GE,” said Abrams.