Looking to streamline operations yet remain in the healthcare sector, GE has agreed to sell Veritas Capital a portion of its healthcare business.
The New York-based private equity firm will pay General Electric $1.05 billion in cash to acquire GE Healthcare’s information technology business, comprised of its enterprise financial management, ambulatory care and workforce management software assets. Veritas has said it will work with GE management to form a standalone business from these assets, which focus mainly on hospital workflow and administrative IT.
GE Healthcare is the Boston-based conglomerate’s third-largest division, bringing in sales of $19 billion in 2017. While some investors are at odds with its departure from GE’s primary industrial business, the division provides a steady revenue stream, buoyed by high-growth markets such as life sciences. Maintaining a presence in the healthcare sector, GE will shift its investments to digital operations in areas more closely related to clinical care, including enterprise imaging, smart diagnostics and connected devices.
Since taking the helm at GE last year, CEO John Flannery has sought to streamline operations and pull GE out of one of the deepest downturns in the company’s 126-year history. To further simplify its portfolio, GE plans to exit other businesses as well. These include the transportation unit, which makes railway locomotives, and the iconic lighting division, well known to consumers for its lightbulbs. “GE said in February it had a ‘line of sight’ on the first $4 billion in asset sales under its plans for $20 billion in disposals, as it tries to shore up its financial performance,” Reuters reports.
The acquisition allows Veritas to “take advantage of a $9 billion market that continues to benefit from favorable sector trends, particularly a real and urgent need to digitalize our healthcare system”, said Ramzi Musallam, the firm’s Chief Executive. The transaction is expected to close during the third quarter of 2018.