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GE Healthcare's revenue hit by continued supply chain challenges

Industry news | 27 January, 2022 | CACLP


Original from: MedtechDive

Image Credit: Jud McCranie


GE's healthcare systems organic revenues in the fourth quarter declined 5%, more than offsetting 2% organic growth in pharmaceutical diagnostics. Nonetheless, Culp told investors that healthcare order demand remained strong in the quarter despite supply chain disruptions.



"We're encouraged that government and private health systems are investing in products and services to support future capacity and improve quality of care," the CEO said. "We're also continuing to invest to meet rising demand from hospital providers, while managing costs through operational improvements."



Despite industry-wide supply chain shortages, CFO Carolina Dybeck Happe added that "market momentum continues to drive strong demand," noting that GE's healthcare systems orders increased 8% organically year over year and pharmaceutical diagnostics orders grew 2% year over year.



While the omicron variant surge is having a recent impact on elective procedure volumes, the CFO said it is "still too early to quantify" but GE is "encouraged to see hospitals better managing routine procedures along with COVID cases."          



In November, the company announced plans to spin off its healthcare operations in early 2023 as a standalone public company with a focus on precision health. Culp said the company wants to help healthcare providers to "personalize diagnoses and treatments" tailored to individual patients.  



Asked whether the timeframe for the planned healthcare spin-off in early 2023 might be moved up, Culp said the company needs to "go through the work over the next year to prepare this business to be independent ... there's a lot of legal, structural, financial, systems and the rest that we need to work through."



On the M&A front, GE last month completed its previously announced $1.45 billion acquisition of surgical visualization company BK Medical, as it looks to expand GE Healthcare's $3 billion ultrasound business from diagnostics into surgical and therapeutic interventions in an effort to create an end-to-end full continuum of care offering.



"We're playing more offense through both organic and inorganic growth opportunities, such as our recent healthcare acquisitions," Culp said. "We're driving organic through innovation."



The CEO added that GE Healthcare has been investing in one of the fastest-growing ultrasound sub-segments, the handheld market. Culp said that "portable ultrasound is expected to become standard of care over time, as it enables quick insights from routine exams with greater mobile flexibility."



GE last year launched its Vscan Air product, a wireless pocket-sized ultrasound that Culp said is now in 70 countries which contributed to "strong" revenue growth in 2021.    



Looking ahead to 2022, GE contends the healthcare unit is well-positioned for continued profitable growth targeting 25-75 basis points of margin expansion as it prepares to stand up the business as an independent company.



"In healthcare, we see low- to mid-single-digit revenue growth driven by our commercial efforts and new product launches, tempered by continued supply chain challenges through at least the first half [of this year]," Culp said.    



GE will provide additional details on its 2022 outlook during a March 10 investor event.


Source: GE Healthcare's revenue hit by continued supply chain challenges

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