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General Electric (GE) HealthCare Arm Reveals Medium-Term Targets

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General Electric’s (GE - Free Report) HealthCare unit has provided medium-term financial targets at an investor day held in New York on Dec 8.

GE HealthCare expects organic revenue growth in mid-single digits over the medium term. It anticipates an adjusted EBIT margin of high teens to 20% over the same time. Free cash flow conversion is estimated to be more than 85% in the medium term.

General Electric’s HealthCare unit is set to spin off into a separate public company on Jan 3, 2023. The spun off company will begin public trading the following day under the ticker symbol GEHC. GE HealthCare will cater to Imaging, Ultrasound, Patient Care Solutions and Pharmaceutical Diagnostics services.


GE HealthCare expects to drive revenues and growth through innovation, business optimization and organic investment. GE chairman and CEO H. Lawrence Culp, Jr. said, “In this next chapter as a standalone company, GE HealthCare will be even better positioned to advance its mission of precision care, while driving growth, and margin expansion.”

As a standalone company, GE HealthCare’s increased focus and agility are expected to enhance its growth and generate solid free cash flow, per a statement released by General Electric.

The spin-off of the healthcare business is part of General Electric’s plan to split its business into three independent companies — comprising GE Healthcare, GE Aviation (to be renamed GE Aerospace) and the combined operations of GE Digital, Renewable Energy and GE Power (to be named GE Vernova).

The spin-off of GE Digital, Renewable Energy and GE Power businesses is expected to be completed in early 2024. Following the completion of these transactions, GE plans to operate as an aviation-focused company starting in early 2024. GE’s separation into three public companies is expected to help each business to flourish through better operational focus, capital allocation policies and financial flexibility.

Zacks Rank & Key Picks

General Electric currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks worth considering are as follows:

Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1 (Strong Buy). AIT delivered a trailing four-quarter earnings surprise of 24.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.

Applied Industrial has an estimated earnings growth rate of 14.3% for the current fiscal year. The stock has gained 26.5% in the past six months.

IDEX Corporation (IEX - Free Report) presently carries a Zacks Rank #2 (Buy). The company pulled off a trailing four-quarter earnings surprise of 5.7%, on average.

IDEX has an estimated earnings growth rate of 28.3% and 6.1% for the current and next years, respectively. The stock has rallied 26% in the past six months.


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