GE is set to spin off its healthcare unit into a standalone company. The action will create one of the largest healthcare businesses in the world, with products spanning medical imaging, data analytics and patient monitoring.
Healthcare has been bright spot for GE in recent years, with sales at the profitable unit hitting $19 billion last year. But with CEO John Flannery staking his reign on the belief that GE needs to become a simpler, leaner organization to recover from its recent troubles, the conglomerate is set to split from the unit over the next 12 to 18 months.
The separation will create a new, independent healthcare giant, which Bloomberg reports may have an enterprise value of up to $70 billion. While that makes GE Healthcare a big business in its own right, the unit’s leaders think the organization will be nimbler once freed from the broader GE structure.
“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 CEO Kieran Murphy said in a statement.
Murphy will continue to lead the healthcare unit after the separation and the business will keep the GE brand. Beyond that, the implications of the separation for the healthcare unit are unclear, with communications from GE focusing more on what it means for the rest of the business.
News of the planned split comes three months after Veritaal Capital struck a $1.05 billion deal to buy health IT assets from GE Healthcare. The sale will narrow the focus of GE Healthcare by freeing it of technologies for managing health finances, workforces and ambulatory care, although the business will still have an unusually broad focus spanning from biomanufacturing to patient monitoring.