GE Sheds Health IT Assets for $1B, Doubles Down on A.I. and Devices

General Electric is selling a chunk of its healthcare IT business to New York private equity firm Veritas Capital for $1.05 billion in cash, as GE (NYSE: GE) chief executive John Flannery aims to streamline the Boston-based industrial behemoth and reverse a steep decline in its stock price.

Veritas has agreed to acquire GE Healthcare’s “value-based care division,” which includes its financial management, ambulatory care management, and workforce management software units. The deal is expected to close in the third quarter, according to a press release.

Veritas said it plans to invest in the new standalone company to take advantage of market trends, including the continued digitization of the healthcare industry. The value-based care division’s management team and 1,300 employees—located primarily in Boston; Burlington, VT; Seattle; Milwaukee; and India—will “transition to Veritas intact” after the acquisition closes, a spokeswoman said in an e-mail to Xconomy.

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“We now have the opportunity to further revitalize our product portfolio and pursue complementary acquisitions to better serve patients, providers, and payers,” said Jon Zimmerman, vice president and general manager of Value-Based Care Solutions at GE Healthcare, in a press release.

The Veritas deal underscores which healthcare technologies GE sees as most promising and critical to its future operations. In the press release, GE Healthcare CEO Kieran Murphy said the business will continue to invest in “smart” diagnostics, connected devices, artificial intelligence, and imaging. Those areas have become increasingly important to GE Healthcare, as it tries to elbow past rivals like IBM and Philips in data analytics and A.I. applications for healthcare. (It’s worth noting that Veritas’s past healthtech acquisitions include Truven Health Analytics, which it sold to IBM Watson Health for $2.6 billion in 2016.)

The deal also continues the recent upheaval at GE, as new CEO Flannery (pictured above)—who took the helm last summer—tries to right the ship.

The company has been cutting jobs and its stock dividend, as it deals with shrinking revenues and profit margins in some businesses, Reuters reported. GE also reported $11 billion worth of charges in its fourth-quarter financial results, including a $6.2 billion charge to increase its insurance reserves. The SEC is investigating that charge as part of a broader inquiry into the company, Reuters reported.

In November, Flannery said GE intended to shed at least $20 billion worth of its assets, in areas such as lighting and transportation, in order to focus on the company’s aviation, power, and healthcare businesses. A couple of months later, he indicated GE was considering spinning off businesses from within any of its divisions.

GE’s stock was trading around $13 per share Monday afternoon, down from $13.48 at the end of trading on Thursday. (U.S. markets were closed on Friday.) It was trading near $30 per share a year ago.

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