- GE Healthcare has entered into a definitive agreement with Veritas Capital, a private equity investment firm, to sell a package of health IT tools for about $1 billion.
- The deal includes GE’s revenue cycle, ambulatory care and workforce management assets, as well as its Centricity EMR business.
- Veritas’ current healthcare portfolio includes government-focused technology company Peraton and healthcare technology company Verscend Technologies. Veritas has helped build and sell healthcare companies, including sales of Truven Health Analytics to IBM Watson Health and Vangent to General Dynamics.
GE CEO John Flannery took over last August to turn around a company which has seen its stock trend downward for the last year.
Monday, GE’s price per common stock closed at $13.12, down from $29.88 a year ago.
The sale is the latest in a long line of cost-cutting steps by the conglomerate. GE last year said it would trim about 25% of its corporate staff, about 1,500 positions, worldwide. The power division in December announced cuts of 12,000 jobs.
The health IT divestiture is another move to trim the company’s less profitable assets. Of GE’s $122 billion in 2017 revenue, GE Healthcare accounts for $19 billion, but IT & digital tools only account for $2 billion worth of annual sales.
The majority of GE Healthcare’s sales comes from diagnostic imaging, at about $8 billion. Life sciences accounts for $5 billion and mobile diagnostics $4 billion.
The sale will help GE Healthcare focus on its other health IT portfolio tools, including data analytics, life sciences, artificial intelligence and imaging space.
“GE Healthcare will continue to significantly invest in core digital solutions, such as smart diagnostics, connected devices, AI and enterprise imaging,” Kieran Murphy, GE Healthcare President and CEO, said in a statement. “We will continue to lead in data analytics, command centers, advanced visualization and image management tools.”
Focusing on AI and diagnostic imaging seems like a safe play.
At a presentation at this year’s HIMSS conference, James Golden, managing director of PwC Health Advisory, and Christopher Ross, chief information officer at Mayo Clinic, highlighted a pair of studies showing potential of AI in imaging services.
In one study, an AI algorithm performed at least 91% as well as human physicians when tested against 21 dermatologists on the ability to identify malignant skin conditions and benign lesions. Another showed supervised machine learning could predict the status of certain tumors, serving as a non-invasive biomarker.
The $1.05 billion sale will certainly help the company, but some were surprised by the price tag.