General Electric’s healthcare unit is ready to begin its solo flight on the bourses.
In November 2021, the industrial giant decided to break up into three parts. Its healthcare unit, comprising medical technology, pharmaceutical diagnostics, and digital solutions, starts trading on the Nasdaq under the ticker GEHC tomorrow (Jan. 4).
The healthcare unit is the first one to spin out. Next, in early 2024, GE plans to create a new entity by combining its renewable energy, power, and digital into one business.
The remaining GE will become “an aviation-focused company.” Aviation has been GE’s most lucrative segment, where it not only earns from manufacturing and selling jet engines to the likes of Boeing and Airbus, but also from running an aftermarket servicing business of repairs and maintenance.
GE Healthcare, by the digits
$31 billion: GE Healthcare’s estimated valuation (as of Nov. 2022)
3: Shares held in the original conglomerate that would get individual shareholders one share in the new health entity
80.1%: Outstanding shares of GE Healthcare up for distribution
19.9%: GE’s remaining stake in the healthcare spin-off
$18 billion: Annual revenue from imaging, ultrasound, patient care solutions, and pharmaceutical diagnostics. Imaging is the biggest business, raking in upwards of $9 billion
1 billion: Patients GE’s health business serves every year, with 2 billion procedures through services and devices
14%: How much the GE stock has fallen in the last 12 months as investors await the split
GE Healthcare’s liquidity, in CFO Helmut Zodl’s words
“We’re going to be spinning off with strong liquidity—$1.8 billion cash on the balance sheet and a $3.5 billion facility that really will help us in case there will be a slowdown.” -GE Healthcare CFO Helmut Zodl, speaking to Fortune in December.
GE Healthcare’s growth roadmap
At GE HealthCare’s Investor Day at Nasdaq in New York City on Dec. 8, executives shared a blueprint of the company’s priorities:
🌐 harnessing and connecting data using its Edison digital platform;
🤝 acquisitions, which remain part of a strategy that has seen 25 deals made so far;
🔬doubling down on research and development.
The domino effect of GE Healthcare entering the S&P 500
As soon as it starts trading, GE Healthcare will be included in the S&P 500, which tracks the 500 largest public companies in the US, the stock market index announced on Dec. 28. It will replace Vornado Realty Trust, which will move to the S&P MidCap 400 on Jan. 5, replacing logistics firm RXO. The same day, RXO will enter the S&P SmallCap 600, marking the exit of chiropractic care company The Joint Corp.
“Vornado Realty is more representative of the mid-cap market space. RXO is more representative of the small-cap market space, and The Joint is no longer representative of the small-cap market space,” the S&P press release said.
✂️ General Electric is splitting into three companies
💥 What does the breakup of GE say about the future of conglomerates?