GE Healthcare will spin off into a standalone company over the next 12 to 18 months, its parent company General Electric Co. announced Tuesday.
The Chicago-based medical technologies and services General Electric subsidiary has about 6,000 employees in Wisconsin, with significant operations in Waukesha and locations in Milwaukee, Oak Creek, West Milwaukee, Wauwatosa, and a plant in Madison. It provides medical imaging, monitoring, biomanufacturing and cell therapy technology.
GE also said Tuesday it will fully separate its 63 percent interest in Baker Hughes, a Houston-based oil field services company, over the next two to three years.
John Flannery, chairman and CEO of GE, told investors Tuesday that both GE Healthcare and Baker Hughes are two strong and competitive businesses that face operating constraints being part of GE.
Flannery said the changes are the culmination of his observations over 10 years as he has considered how different elements of the company might be able to grow.
“It’s a dramatic sweeping change,” he said, adding that GE Healthcare is best positioned to create value outside of the main company.
GE Healthcare recorded more than $19 billion in revenues in 2017, posting 5 percent revenue growth and 9 percent segment profit growth in the same year.
Being freed from GE will make capital available for new sources of growth, particularly in the areas of digitization and digital technologies, said Kieran Murphy, GE Healthcare president and CEO.
“We want to play a significant role in this emerging area,” Murphy said.
GE expects to monetize 20 percent of its interest in the health care business and distribute the remaining 80 percent to GE shareholders via spinoff.
GE did not say what the impact, if any, would be on area GE Healthcare employees.
The announcement follows a series of changes GE has made in the past year, as it has shifted its focus to aviation, power and renewable energy.
“Today marks an important milestone in GE’s history,” Flannery said in a press release. “We are aggressively driving forward as an aviation, power and renewable energy company — three highly complementary businesses poised for future growth. We will continue to improve our operations and balance sheet as we make GE simpler and stronger.”
In a separate announcement Monday, GE said it is selling its distributed power business, including the Waukesha engine brand it acquired in 2011, for $3.25 billion to the private equity firm Advent International. The companies expect to complete the deal by the fourth quarter of 2018, pending regulatory approvals. It includes the Jenbracher and Waukesha engine brands along with manufacturing sites in Austria, Canada and the United States.
BizTimes reporter Arthur Thomas contributed to this report.