GE Healthcare

GE Healthcare ($GE)
CEO: John Flannery
Based: Little Chalfont, U.K.
2014 sales: $9.84 billion
2013 sales: $9.78 billion
Change: 1%

Revenues at GE Healthcare have been virtually unchanged for the past three years. And 70% of the group revenues comes from the Healthcare Systems group, which includes a vast array of technologies including X-rays, digital mammography, computed tomography (CT), magnetic resonance, interventional imaging and molecular imaging, ultrasound, electrocardiography, bone densitometry, patient monitoring, incubators and infant warmers, respiratory care and anesthesia management.

But the group seems unable to move the needle--its strategy largely reduced to cost-cutting while maintaining revenues. Summed up Sanford Bernstein analyst Steven Winoker on GE's healthcare business on its most recent earnings call, "The business model is to be down every quarter and take costs down by more. But that can't be a good thing for too long."

GE Chairman and CEO Jeff Immelt responded by basically echoing his observation, but not providing any sort of alternative vision of growth or innovation to guide the future of the business.

"We're ripping apart the critical axis that is gross margins across each one of these businesses," Immelt said. "And I think in healthcare, managing the pricing is going to be a key part of how we get enhanced gross margin improvement in that specific business."

The top-performing GE healthcare groups highlighted by Immelt include U.S. imaging and ultrasound equipment orders, which were up 12% in the most recent quarter.

Healthcare accounts for a scant 12% of GE's revenues and 17% of its industrial segment profit.

"We saw growth across most modalities with particular strength in CT, up 22% from our new Revolution CT introduction and ultrasound up 15% from a new product in the women's health diagnostic space. This was offset by softer orders in Japan, Russia and the Middle East," Immelt said, fleshing out some of the revenue growth high points in the segment.

In October, GE promoted its SVP of business development to head up GE Healthcare; John Flannery is now the president and CEO of GE Healthcare. Given his biz dev background, it will be interesting to see if he will spark some life and momentum back into the company through dealmaking.

-- Stacy Lawrence (email | Twitter)

For more:
GE Healthcare opens first health tech incubator
GE promotes biz dev exec to head healthcare
GE Healthcare makes a buyout deal in hospital management tech
GE beefs up life sciences division with $1.06B Thermo Fisher deal
CareFusion scoops up GE Healthcare Vital Signs arm for $500M

GE Healthcare