By Khushi Mandowara and Leroy Leo
(Reuters) -General Electric Co’s healthcare division is aiming to have a medium-term organic revenue growth in the mid-single-digits, the unit’s Chief Executive Officer Peter Arduini said at an investor day conference on Thursday.
GE Healthcare, which will be spun off into a separate listed company early next year, expects an aging population, chronic diseases and a rise in the middle class in many emerging markets to drive growth targets for the company.
China, which accounts for about 15% of total GE Healthcare sales, would also help drive growth as there is a pent-up demand in the market, Arduini said.
Besides organic growth, the company will also look at “tuck-in” acquisitions to boost its business, on similar lines as its $1.45-billion buyout of ultrasound device maker BK Medical last year, Chief Financial Officer Helmut Zodl said.
GE Healthcare also expects medium-term adjusted core earnings margin to be close to 20%.
Zodl highlighted challenges such as macroeconomic factors, supply chain challenges, restructuring action undertaken in 2022 along with planned investment in research and development which may weigh on its core earnings margin.
The new company’s medium-term goal for core earnings margin “should be well received in light of concerns around the R&D step-up that might be needed”, wrote Barclays analyst Julian Mitchell in a note.
The healthcare company had revenue of around $18 billion last year, with about half of it from recurring sources, GE Healthcare said in a presentation.
General Electric in November last year announced it would split into three publicly traded units focused on healthcare, aviation and energy as it aimed to simplify business and pare down debt.
GE Healthcare will operate imaging and ultrasound devices, patient care solutions and pharmaceutical diagnostics businesses.
The healthcare unit is expected to complete its spin off on Jan. 3, with public trading being set from the next day.
(Reporting by Khushi Mandowara and Leroy Leo in Bengaluru; Editing by Krishna Chandra Eluri)
