GE to Spin Out Healthcare Division in Corporate Restructuring
General Electric said Tuesday that it plans to spin its GE Healthcare division out into a separate company and make other major structural changes in a bid to reduce debt and narrow the iconic yet ever-evolving American company’s areas of focus.
GE Healthcare, which is headquartered in Chicago, said its 54,000 employees are scattered across 140-plus countries. About 6,000 of them are reportedly based in southeastern Wisconsin; GE Healthcare also has operations in other parts of the Badger State, including the Madison, WI, area.
GE, which moved its global headquarters from Fairfield, CT, to Boston beginning in 2016, said that shedding the company’s healthcare division and other business lines will allow it to concentrate on aviation, power, and renewable energy. Those areas encompass GE’s production of airplane engines, gas turbines, and other machinery, the company said.
John Flannery, who replaced longtime GE CEO Jeff Immelt last August, said in a news release that his company is “aggressively driving forward as an aviation, power and renewable energy company … We will continue to improve our operations and balance sheet as we make GE simpler and stronger.”
Before deciding to make GE Healthcare a standalone company, GE previously sold off its distributed power, industrial solutions, and value-based care divisions. GE said those sales, along with combining its transportation business with Wabtec (NYSE: WAB), represent a $20 billion divestiture.
The spinout of GE Healthcare, which had been part of GE for two dozen years, and other changes announced on Tuesday give GE a “clear path to reduce debt by $25 billion” in the next two years, the company said.
Kieran Murphy will continue to serve as president and CEO GE Healthcare, which recorded revenues of more than $19 billion in 2017. The new company will presumably stay based in Chicago; GE did not indicate otherwise in the release. GE also did not say whether the spinout will keep the GE Healthcare name.
GE’s stock (NYSE: GE), which has been slumping since late 2016, finished the trading day Tuesday up nearly 8 percent.