News | Radiology Business | February 25, 2019 | Jeff Zagoudis, Associate Editor

CEO Larry Culp Jr. says 2019 spinoff of healthcare division “unlikely” as company focuses on finishing $21.4 billion biopharma sale to Danaher by end of the year

GE to Postpone Healthcare IPO Following Biopharmaceutical Business Sale

February 25, 2019 — GE Healthcare announced Feb. 25 the sale of its biopharmaceutical business to Danaher, and GE Chairman and CEO Larry Culp Jr. said the deal signified that a planned 2019 initial public offering (IPO) for GE Healthcare is now unlikely. GE is reportedly weighing its options following the deal, which casts off the biopharmaceutical business for $21.4 billion.

“We are focused on completing the carve out [of the biopharma business] — which is 15 percent of the $20 billion healthcare segment — and focused on managing the remaining core business,” Culp told CNBC. Culp previously served as CEO at Danaher — a global science and technology company in the fields of environmental and applied solutions, life sciences, diagnostics and dental — from 2001 to 2014. He was named to the top position at GE in October 2018 to replace previous CEO John Flannery, who was removed after just 14 months on the job.

The biopharmaceutical business is part of GE Life Sciences and generated approximately $3 billion in revenue for the parent company in 2018. This branch manufactures instruments, consumables and software to support the research, discovery, process development and manufacturing workflows of biopharmaceutical drugs. The company said its pharmaceutical diagnostics business, which supplies contrast media and molecular imaging consumables for radiology customers, will remain within the GE Healthcare portfolio.

GE first announced plans to spin off its healthcare division into a standalone company in June 2018. The move is part of attempts by the multinational conglomerate to streamline its operations and refocus on its core industrial and energy businesses in the face of financial difficulties in recent years. Healthcare has been one of GE’s most profitable businesses recently, generating approximately $19 billion in revenue and $3.4 billion in profit in 2018. In 2017, the division was responsible for nearly 16 percent of the parent company’s total sales and more than 43 percent of its operating profit, according to CNBC.

Wall Street reported that news of the biopharmaceutical sale caused GE’s stock to jump as much as 16 percent on Monday, reaching levels not seen since last October. Overall, analysts say the parent company’s shares have advanced 34 percent in 2019 as of Feb. 22.

GE Healthcare President and CEO Kieran Murphy said in a statement, “The biopharma business has been a strong contributor to our success, and I am confident this agreement represents a great opportunity for our valued colleagues to flourish under the ownership of Danaher. GE Healthcare has unsurpassed scale and scope and we will continue to focus on our investments so that we deliver better outcomes and more capacity to a world striving for precision health.”

GE expects to complete the sale to Danaher by the end of 2019.

For more information: www.gehealthcare.com


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