On 4th March 2020 – GE hosted its annual Investor Outlook presentation with commentary and projections provided for each of its business segments; Industrial, Power, Renewable Energy, Aviation and Healthcare. The commentary on its healthcare business was delivered by Kieran Murphy, President and CEO of GE Healthcare.
My notes from the call:
The GE Healthcare business is a world-class healthcare systems & pharmaceutical diagnostics business with 50,000 employees, serving customers in over 160 countries. GE has a strong supply chain with 38 plants globally as well as an unrivalled service business, with approximately 8,000 field service engineers supporting an installed base of over 4 million units. GE is uniquely positioned to win in precision health and has over 20 R&D sites globally, which have contributed toward a solid track record of innovation.
Projected organic revenue growth
During 2020, GE Healthcare expects to achieve low-single-digit sales growth, driven by a stable healthcare systems market within the U.S and EU, as well as growth from the pharmaceuticals diagnostics market. This estimate is excluding its BioPharma business. During 2021 and onward, GE Healthcare anticipates annual sales growth within the low-single-digit to mid-single-digit range, driven by a stable healthcare systems market as well as new product launches, in particular, leveraging its digital analytics and artificial intelligence capabilities.
Q1 2020 impact of COVID-19
For the first quarter of 2020, GE Healthcare anticipates a negative impact to free cash flow of approximately $50m to $100m (non-GAAP measure) due to COVID-19. This is incorporated into GE’s full-year 2020 outlook. Further impact beyond Q1 2020 is not incorporated.
GE Healthcare has approximately 7,000 employees based across China and the company has put into action a number of measures to help ensure the safety of it’s employees. This includes altering travel plans, supplying personal protective equipment (PPE) as well as enhancing protocols. In terms of providing medical equipment, the company has made donations of equipment and consumables to help assist with the response to COVID-19.
GEHealthcare begun to ramp up of manufacturing of it’s healthcare systems in collaboration with over 400 local supplies in China, as well as engaging in an unprecedented logistics push to ensure that equipment and parts are available when required. All five of GE’s manufacturing plants worked through the Chinese New Year to meet demand. In addition, more than 600 field Engineers, many within the Hubei province, have been working extra hours to ensure that medical equipment is installed and working properly to help with the response to COVID-19.
The number one priority of the GE Healthcare business has been to improve the growth rate of it’s healthcare systems business. Over the past 3-months, the company has “invested heavily” into its sales and front line teams, particularly within the U.S. and China, in order to better service its customers. This has helped increase visibility on sales pipeline as well as improve GE’s win rates.
At the same time, GE’s product teams have been busy. GE launched a total of 31 new products and solutions at RSNA 2019, totalling 61 during 2019. Digital and AI are differentiators for GE and play an increasingly important role in the new product engine; with 18 new applications having been launched on the Edison platform over the past few months.
China has historically been a tremendous market for GE, and despite near term disruption due to COVID-19, the company has continued to implement various localisation projects which includes launching new products targeted specifically for this market. This is across MR, CT and X-ray imaging platforms. GE expects that these new products can be levered within other emerging markets.