Low-to-mid single-digit growth expected for GE Healthcare in 2021

por John R. Fischer, Senior Reporter | March 16, 2021
Business Affairs
GE expects its healthcare business to experience low-to-mid single digit growth throughout the remainder of 2021
GE is predicting low-to-mid single-digit growth for its healthcare business revenue for the remainder of 2021.

The company expects to see “continued strength” and says the sale of its aircraft leasing business will enable it to focus more on its industrial businesses, including healthcare.

"We are excited to shift more toward offense, investing in breakthrough technologies to serve the needs of our customers and the world — for more sustainable, reliable, and affordable energy; more integrated and personalized healthcare; and smarter and more efficient flight,” said GE chairman and CEO H. Lawrence Culp Jr. in a statement.

Organic profit margin for GE Healthcare is expected to grow by 25 to 75 basis points in 2021, while its industrial free cash flow will go from flat to slightly up. It recently reported 6% growth in its fourth quarter organic revenue, excluding results from the divestiture of its Biopharma business in March 2020. Growth was attributed to ventilator and imaging sales needed for COVID-19 patients.

The company as a whole expects industrial revenues to grow organically in the low-single-digit range, with adjusted GE industrial profit margin expanding organically by 250-plus basis points. Industrial free cash flow is predicted to be $2.5 billion to $4.5 billion, with an adjusted earnings per share of $0.15 to $0.25.

GE plans to merge its aircraft leasing unit, GE Capital Aviation Services business (GECAS), with rival AerCap Holdings of Ireland, for over $30 billion. It explains that the move simplifies the company and enables it to focus on its power, renewable energy, aviation and healthcare, as well as reduce GE Capital assets and produce proceeds to further de-risk and de-lever.

"We're focused on delivering an unparalleled customer experience and leveraging our installed base to upgrade systems with analytics for clinical and productivity improvements. We are increasing our R&D investment to drive leading innovation across digital, AI and our platform, Edison," said GE Healthcare's CEO Kieran Murphy in a March 10th call about the company's predicted growth.

It expects the closing of the transaction will enable it to rack up an approximately $3 billion non-cash charge in the first quarter of 2021, at which point it will report GECAS as a discontinued operation. GE’s 2021 industrial free cash flow outlook excludes the one-time impact of this decision.

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