Peter Arduini, who earlier had been tapped to become CEO and president of the health business from the beginning of 2022, will head the new independent entity. The present division accounted for $18 billion of GE’s nearly $80 billion total global revenue for 2020, with the strong earnings performance said to be driven largely by sales of respiratory devices and imaging and ultrasound machinery – a business area that has come into clearer focus of late.

GE first floated plans for a spinoff of the healthcare division in June 2018, when it calculated that a separate company could be worth as much as $70 billion. It was mooted to have filed for a confidential IPO in December of that year, but decided instead to sell its biopharma activities to Danaher in a $21.4 billion transaction. The business was subsequently relaunched as Cytiva.

The activities that remained with GE Healthcare are broadly focused and range from cardiology and radiology to breast health and oncology, with neurology and orthopedics squeezed in between, flanking other health-related fields such as anesthesia delivery and diagnostics.

While spinning off healthcare, GE will make additional strategic moves outside this field, with the intent of creating what it said will be a “more focused, simpler, stronger high-tech industrial company.” In one of these, it plans to combine its renewable energy, power and digital divisions into a single business and spin these off in early 2024.

In the final act, for the present at least, the remaining businesses under the General Electric umbrella will be rebranded as GE Aviation. This third standalone company will be headed by H. Lawrence Culp, the current group CEO.

Culp will also serve as non-executive chairman of the new GE Healthcare, as well as continuing as chairman and CEO of the GE group until the second spin-off is completed. The new aviation-focused company will retain other assets and liabilities of the current multipronged group, including run-off insurance operations.

“By creating three industry-leading, global public companies, each can benefit from greater focus, tailored capital allocation and strategic flexibility to drive long-term growth and value for customers, investors and employees,” Culp said in a statement.

The massive reshuffle – not the first in the history of the 130-year-old company and potentially not the last – is expected to cost roughly $2 billion in one-time separation, transition and operational costs, in addition to tax fees of less than $500,000, depending on the specifics of the transactions.

In a previous major shakeup, GE sold its engineering plastics businesss to SABIC in 2007 for $11.7 billion. This was some $1.6 billion more than parent company GE was believed to be initially seeking for the business that had sales of $6.7 billion and operating profit of $738 million a year earlier.

Author: Dede Williams, Freelance Journalist