GE could give up healthcare biz as it forges on with reorg: Analyst

GE Healthcare CEO John Flannery

GE ($GE) is pledging to hold on to its life sciences unit even as it shakes up other parts of its business. Some analysts speculated that GE might sell its healthcare unit, one of its largest businesses with sales of $17.6 billion last year, after GE CEO Jeffrey Immelt decided to steer the company toward heavy-duty machinery.

Earlier this month, RBC Capital Markets analyst Deane Dray said that GE's new focus could put healthcare on the chopping block. "It is within the realm of possibility that Healthcare, or part of the segment, could eventually be divested," Dray said at the time. GE's diagnostics and life sciences "have enough critical mass" to stand on their own and thus "could arguably be declared as noncore to GE's portfolio migration," Dray said.

But GE is singing a different tune. There may be some "scattered portfolio pruning" on the horizon as GE forges ahead with its growth plans, GE Healthcare CEO John Flannery said. But at least for now, that doesn't include healthcare or life sciences.

Life sciences is "a fundamentally attractive industry with growth" and the company has a "very strong competitive position" in the market, GE Healthcare CEO John Flannery said, as quoted by Bloomberg. "We are certain this business grows faster inside of GE than it would grow outside." The company expects sales of the unit, which makes products for areas such as chromatography, imaging and cell-therapy, to jump at least 10% this year.

In the meantime, don't expect the company to make any big deals while it cleans up shop, Flannery said. Prices for deals are high, and GE has "been outbid on a number of things," Flannery said, as quoted by Bloomberg. The company will consider smaller, bolt-on deals but feels it "can drive earnings and margins best with an organic strategy," Flannery said, which includes cutting costs.

- read the Bloomberg story

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